Sandra Jones intends to retire in 20 years at the age of 65. As yet, she has not provided for retirement income, and she wants to set up a periodic savings plan to do this. She has the opportunity to make equal annual payments into a savings account that pays 4 percent interest per year. How large must her payments be to ensure that after retirement, she will be able to draw $30,000 per year from this account until she is 80?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
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Sandra Jones intends to retire in 20 years at the age of 65. As yet, she has not provided for retirement income, and she wants to set up a periodic savings plan to do this. She has the opportunity to make equal annual payments into a savings account that pays 4 percent interest per year.

How large must her payments be to ensure that after retirement, she will be able to draw $30,000 per year from this account until she is 80?

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