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Daria plans to retire in 20 years and wants to know how much she will need to have in her account when she retires. She wants to be able to withdraw $5,000 per month for 25 years of retirement, and she expects her account to earn a nominal rate of 9 percent per year. Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without $ sign.)

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quyenthao111

We know that she has 20 years left until she retire

We need to find the amount she have to save and add to her saving per year for the the next 20 years.

Given she wants to be able to withdraw $5000 per month for 25 years

25 years = 300 months

$5,000 x 300 months = $1,500,000

she will needs one million and five hundred thousand dollars when she retire

Let's say she just started saving

Daria needs to have present value of the annuity of 25 years, PV is then calculated using the PV function as follows:

=PV(rate,nper,pmt)

=PV(9%/12,12*25,5000)

=595808.11

The present value should be 595808.11.

Calculation of the present value:

Given that,

The 25 years = 300

The rate is = 9% /12

PMT = $5,000

Now the following formula should be used.

=PV(rate,nper,pmt)

=PV(9%/12,12*25,5000)

=595808.11

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