You will pay into a pension fund until you are aged 65. You are expected to live until your 80th birthday. You are currently 21 years of age. Pension fund contributions are madel bi-weekly (use n=2/52) beginning in 2 weeks time. If you are promised an interest rate of 7% compounded monthly: a) What should be the size of your contribution if you plan to have $1 million at age 65? b) Following your final contribution at age 65, you will retire. You will begin to withdraw money at the end of each month at a declining rate. Each subsequent withdrawal will fall by a constant rate of 0.5% per month for the duration of your life. You withdraw the final
You will pay into a pension fund until you are aged 65. You are expected to live until your 80th birthday. You are currently 21 years of age. Pension fund contributions are madel bi-weekly (use n=2/52) beginning in 2 weeks time. If you are promised an interest rate of 7% compounded monthly: a) What should be the size of your contribution if you plan to have $1 million at age 65? b) Following your final contribution at age 65, you will retire. You will begin to withdraw money at the end of each month at a declining rate. Each subsequent withdrawal will fall by a constant rate of 0.5% per month for the duration of your life. You withdraw the final
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 44P
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