Question

Nelson Collins decided to retire to Canada in 10 years. What amount should Nelson deposit so that he will be able to withdraw $80,000 at the end of each year for 25 years after he retires? Assume Nelson can invest money at 7% interest compounded annually. (p. 322)

Answer 1

Assuming that at the date Jimmy retires, he wants enough income for 25 years of retirement and the rate of inflation will remain at 3.0% per year, how much will Jimmy and Jane need to live on for 25 years? (Hint: Use $160,000 for your payment variable).