Suppose a 30 year old decides to deposite $350 per month in an ordinary annuity

Question

Suppose a 30 year old decides to deposite $350 per month in an ordinary annuity that earns annual interest of 6%. When the person retires at the age of 67, his/her contributions stop, but the person remains invested at the more conservative interest rate of 3% per year. Use MAPLE but document your work.
A) how much is the annuity worth at the time the person retires?
B) suppose the person keeps withdrawing $3,300 a month in retirement. What would be the balance of the annuity when the person reaches the age of 85?
Suppose a 30 year old decides to deposite $350 per month in an ordinary annuity that earns annual interest of 6%. When the person retires at the age of 67, his/her contributions stop, but the person remains invested at the more conservative interest rate of 3% per year. Use MAPLE but document your work.
A) how much is the annuity worth at the time the person retires?
B) suppose the person keeps withdrawing $3,300 a month in retirement. What would be the balance of the annuity when the person reaches the age of 85?

Explanation / Answer

Future value at T 37*12 = ?

PMT = 350 per month

N = 444

I/Y= 6%

FV = 350*(1.005) + ......350*(1.005)^444

FV = 570957.83

1. So at 67 the value of fund = 570957.83$

2. PV = 570957.83$

PMT = -3300$

N= 18*2= 36

I/Y = 3% or 0.25% monthly

FV = 500509.364$

By using financial calculator.

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