Question

An annuity is developed and used based on the concept of time value of money. Please solve for the principle required when one retires so that a payment of $1500.00 is received each month for 30 years (360 months). Assume that the interest rate for the payout is 5% and the principle fund will be depleted (zero) at the end of 30 years. How much would one need to save monthly for 40 years (480 payments) to have the principle in the future needed to pay out the $1500.00 monthly for 30 years (Assume one can earn 8% on one’s savings)?