Prof. Business wants a 22-year retirement annuity that begins 9years from today with an equal annual payment equal to $115,000today inflated at 2.5% annually over 9 years. Her first retirementannuity payment would occur 9 years from today. She realizes herpurchasing power will decrease over time during retirement.
Prof. Business currently has $660,000 in her Universityretirement account. She expects these savings and any futuredeposits into her University and any other retirement account willearn 8% compounded annually. Also, she expects to earn 7% annualreturn after she retires.
Prof. Business now wants to consider retiring two years earlierin 7 years and will deposit her required University contributionseach year as in question 4 and will deposit and additional $14,400at the end of each year for the next 7 years (first deposit totals$35,400). Also, she will require a 24-year retirement annuity.
Answer from #4:
| Value of retirement account after investment period | | | | | 1951366.329 | | | |
| Amount of annual investment | | | $50,612.24 | |
Questions:
a) How much money will Prof. Business have in herretirement account immediately after her last deposit 7 years fromtoday?
b) What would be the equal annual payment from her24-year retirement annuity whose first payment occurs exactly 7years from today?
Please show work and functions on an excelspreadsheet.
