Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter II, Problem 9E
1.
To determine
Calculate how much amount needs to accumulate at the time of retirement or present value of ordinary annuity
2.
To determine
Calculate the how much money required to pay in each of the 15equal instalments.
3.
To determine
Identify whether the given problem is future value or present value.
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You want to be able to withdraw $40,000 from your account each year for 25 years after you retire. If you expect to retire in 15 years and your account earns 6.6% interest while saving for retirement and 6.2% interest while retired:Round your answers to the nearest cent as needed.a) How much will you need to have when you retire?$b) How much will you need to deposit each month until retirement to achieve your retirement goals?$c) How much did you deposit into you retirement account?$d) How much did you receive in payments during retirement?$e) How much of the money you received was interest?$
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(a) The first part is finding how much we need to have in the account by the time we retire.
Which formula will you use first? Circle one.
Annuity
Payout-Annuity
(b) What are the following variables that we will need for the formula?
PMT =
n =
t =
r =
A or Po =
(c) Write the formula you will use with the numbers plugged in below.
(d) Solve using your calculator or technology and round to two decimal places. Work is not
required here. Write the answer here and state which variable you solved for.
(e) Using your own words, describe what you found by solving the equation in terms of the word
problem given.
Chapter II Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
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