What amount must your father deposit personally each year

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Reference no: EM133377132

Question: Your father is celebrating his 50 th birthday today and wants to start saving for his anticipated retirement at age 65. He wants to be able to withdraw $15,000 from his savings account on each birthday for 20 years following his retirement; the first withdrawal will be on his 66 th birthday. After extensive research, your father determines that he can invest his money in an account that offers 5% interest per year (compounded quarterly). He wants to make equal annual payments on each birthday into the account - the first payment on his 51 st birthday, and the last on his 65 th birthday. In addition your father's employer will contribute $100 to the account at the end of every month as part of the company's profit-sharing plan (a total of 180 contributions). What amount must your father deposit personally each year on his birthday to make the desired withdrawals at retirement? Hint: You will need to convert an EAR based on a quarterly compounded nominal rate to an effective monthly rate.

Reference no: EM133377132

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