can anyone do this math problem?

pmuir10 · #1 12-15-2006, 10:51 PM

Ok i need to figure out how to do this problem by tonight. It should be using some combination of annuity formulas i think but i cant get it right. Any help is much appreciated.

"Cathy wants to retire on $55,000 per year for her life expectancey of 20 years. She estimates that she will be able to earn interest of 9%, compounded annually, throughout her lifetime. To reach her retirement goal, Cathy will make annual contributions to her account for the next 25 years. One year after making her last contribution, she will take her first retirement check. How large must her yearly contributions be?"

Answer: <font color="white"> $5927.56 </font>

pmuir10 · #2 12-15-2006, 10:56 PM

nvm i got it

shdw01 · #3 12-15-2006, 11:00 PM

I got $5927.53

PV of Annuity (20 yrs, 9%) is 55,000 x 9.1285 = 502,067.50

FV of Annuity (25 yrs, 9%) is 502,067.5 / 84.7009 = 5927.53

shdw01 · #4 12-15-2006, 11:01 PM

oops....sorry, didn't see you already figured it out...and it looks like i was off by 3 cents

pmuir10 · #5 12-16-2006, 02:58 AM

thanks anyways