Janet Woo decided to retire to fla. in 6 years. What amount should Janet invest today so she can withdraw 50000.00 at the end of each year for 20 years after she retires? What will be the balance in the account 2 years after the last deposit. I guess i am not sure here how to figure this out here. I am using a texas instrument calculator. HELP

Answer 1

As DrWLS pointed out, they are sinking and not sicking :)

First do the 20 year annuity problem for present value needed when she retires.
She wants 50,000 per year for 20 years
You must have some interest rate r to do the problem.
P = 50,000 * [ 1 - (1+r)^-20 ] / r

so when you retire there is that amount P in the account

Now do the amount N needed to put in your sinking fund each year for the 6 years to have that amount P in the account at retirement
N = P * r/[ (1+r)^6 - 1 ]

one year after last deposit she will have [ P (1+r) - 50,000]
two years after last deposit she will have { [ P (1+r) - 50,000]* (1+r)} - 50,000

Answer 2

I think i got this one here but i had to figure this out on a time line that one was hard to do. i seem to have problems with these kinda questions

Answer 3

A2=25000[1 - (1.09)^-30]/0.09= $256,841.35
256,841.35=A1(1.09)^10; A1= $108,492.56