Funding a retirement
goal. Connor Ward wishes to have $800,000 in a retirement fund 20 years from
now. He can create the retirement fund by making a single lump-sum deposit
today.
If he can earn 6 percent
on his investments, how much must Connor deposit today to create the retirement
fund? If he can earn only 4 percent on his investments? Compare and discuss the
results of your calculations.
b. If, upon retirement in 20 years, Connor
plans to invest the $800,000 in a fund that earns percent, what is the maximum
annual withdrawal he can make over the following 15 years?
How much would Connor
need to have on deposit at retirement to annually withdraw $35,000 over the 15
years if the retirement fund earns 4 percent?
d. To achieve his annual
withdrawal goal of $35,000 calculated in part c, how much more than the amount
calculated in part a must Connor deposit today in an investment earning 4 per-
cent annual interest? 4 C. German
