In their meeting with their advisor, Mr. and Mrs. O'Rourke concluded that they would need $40,000 per year during their retirement years in order to live comfortably. They will retire 10yrs from now and expect a 20yr retirement period. How much should Mr. and Mrs. O'Rourke deposit now in a bank account paying 9 percent to reach financial happiness during retirement?
Answer
In their meeting with their advisor, Mr. and Mrs. O'Rourke concluded that they would need $40,000 per year during their retirement years in order to live comfortably. They will retire 10yrs from now and expect a 20yr retirement period. How much should Mr. and Mrs. O'Rourke deposit now in a bank account paying 9 percent to reach financial happiness during retirement?
A= P(1- I/(1+ r)^n /r)
=40000 (1- 1/(1+0.09%)/ 0.09)=365141.82
Pv =365141.82//(1+0.09%)^10= 154239.85
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