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Growing Annuity You are looking to retire in 30 years and want to have $2.2 million saved for retirement. Since you are self-employed, you take one distribution per year, at the end of the year based on the net earnings of your company; and you are anticipating to earn $83,000 at the end of the current year. You are anticipating that you’ll be able to take a 3% increase in distributions each year, and you have estimated that you can earn 9% of the money you invest, on average. If you save a constant percentage of your distributions, what percentage of your pay must you save each year?

Growing Annuity You are looking to retire in 30 years and want to have $2.2 million saved for retirement. Since you are self-employed, you take one distribution per year, at the end of the year based on the net earnings of your company; and you are anticipating to earn $83,000 at the end of the current year. You are anticipating that you’ll be able to take a 3% increase in distributions each year, and you have estimated that you can earn 9% of the money you invest, on average. If you save a constant percentage of your distributions, what percentage of your pay must you save each year?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 35P
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Growing Annuity You are looking to retire in 30 years and want to have $2.2 million saved for retirement. Since you are self-employed, you take one distribution per year, at the end of the year based on the net earnings of your company; and you are anticipating to earn $83,000 at the end of the current year. You are anticipating that you’ll be able to take a 3% increase in distributions each year, and you have estimated that you can earn 9% of the money you invest, on average. If you save a constant percentage of your distributions, what percentage of your pay must you save each year? 

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