the couple E connect FINANCE Brealey: Fundame Library Cou rm (Check your work ca

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the couple E connect FINANCE Brealey: Fundame Library Cou rm (Check your work can only be used ONCE per question for a 5% deduction in question points) Question 11 (of 32) value: 5.00 points A couple thinking about retirement decide to put aside $3.000 each year in a savings plan that earns 8% interest In 5 years they will receive a gift of $10,000 that also can be invested How much money will they have accumulated 30 years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) a. Accumulated savings b. If their goal is to retire with $800,000 of savings, how much extra do they need to save every year? (D not round intermediate calculations. Round your answer to 2 decimal places-) Additional savings per year

Explanation / Answer

a. PMT 3000 Rate 8% Nper 30 Future value of savings = $3000 x Future value of annuity; $3000 x 113.2832 $339,849.63 Future value of Gifts = $10000 x (1+8%)^25 $68,484.75 Accumulated money $408,334.39 b. Accumulated money required by retirement $800,000.00 Accumulated money $408,334.39 Additional money required $391,665.61 Rate 8% Nper 30 Future value $391,665.61 Future value of savings = PMT x Future value of annuity; $391,665.61 / 113.2832 = PMT $3,457.40 Additional savings they need to save per year $3,457.40

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