I hope I put this subject in the right area...If not admins please repost this in the right forum & please and let me know by private message or email. thanks
well here are my two problems. (word problems)
1.) Billly wants to retire in 30 years. He has a balance of $12,000 in his 401(k) plan. Billy expects to need about $865,000 to meet all his needs for retirement living. He expects his investments to earn about 10% annualy (meaning 10% per year) for the next 30 years. calculate the amount he needs to save annually for the next 30 years to accumulate $865,000.
next.
2.) Jane in the same situation as Billy except that she has two children and she feels that she cannot really save more than $1,000 annually towards retirement for the next 10 years. She, however, also feels that she can save substantially more after 10 years. Calculate the amount she would need to save annually after year 10 in order to achieve her retirement goal.
my answers that i tried to do by myself is this (PLEASE LET ME KNOW IF IM WRONG OR I NEED CORRECTIONS!!!)
FIRST THE EQUATIONS THAT IM AM USING ARE.....(PLEASE LET ME KNOW IF IM USING THE WRONG EQUATIONS OR IF THEY NEED TO BE ADJUSTED OR IF I NEED ANOTHER EQUATION THAT I DONT HAVE!!!)
fv - future value fva - future value of annuity
pv - present value pva - present value of annuity
I - interest
N- total number of periods
A - annuity/payments
EQ1.) fv = pv(1+I)^N
EQ2.) fva = A * {[(1+I)^N - 1] / I}
EQ3.) pv = fv / (1+I)^N
EQ4.) pva = A * {[1 - (1 / (1+I)^N)] / I}
Answer 1.) pv = $12,000 and fv = $865,000
so i find what $12,000 would be in 30 years with 10% interest by doing
12000(1.10)^10 = 209392.82 (EQ1)
then i subtract the two numbers.
865000-209392.82 = 655607.18 so this is the amount i have for the fv after accounting for the 12000
so then i use EQ2 to find the annuity for each year.
655607.18 = A * {[(1.10)^10 - 1] / .10]
655607.18 = A * (164.4940227)
A = 3985.60
so for the first one i get $3985.60
Answer 2.) pretty much the same stuff but im getting messed up on the $1000 stuff and accounting for that and other complications here is what i did so far.
i got to the point like the first answer for accounting for the 12000 so my fv is 655607.18 but how do i account for the $1,000 for 10 years and the 20 years after the previous 10? And how do i find the annuity amount after years 10? im so lost on this one? please help!!
well here are my two problems. (word problems)
1.) Billly wants to retire in 30 years. He has a balance of $12,000 in his 401(k) plan. Billy expects to need about $865,000 to meet all his needs for retirement living. He expects his investments to earn about 10% annualy (meaning 10% per year) for the next 30 years. calculate the amount he needs to save annually for the next 30 years to accumulate $865,000.
next.
2.) Jane in the same situation as Billy except that she has two children and she feels that she cannot really save more than $1,000 annually towards retirement for the next 10 years. She, however, also feels that she can save substantially more after 10 years. Calculate the amount she would need to save annually after year 10 in order to achieve her retirement goal.
my answers that i tried to do by myself is this (PLEASE LET ME KNOW IF IM WRONG OR I NEED CORRECTIONS!!!)
FIRST THE EQUATIONS THAT IM AM USING ARE.....(PLEASE LET ME KNOW IF IM USING THE WRONG EQUATIONS OR IF THEY NEED TO BE ADJUSTED OR IF I NEED ANOTHER EQUATION THAT I DONT HAVE!!!)
fv - future value fva - future value of annuity
pv - present value pva - present value of annuity
I - interest
N- total number of periods
A - annuity/payments
EQ1.) fv = pv(1+I)^N
EQ2.) fva = A * {[(1+I)^N - 1] / I}
EQ3.) pv = fv / (1+I)^N
EQ4.) pva = A * {[1 - (1 / (1+I)^N)] / I}
Answer 1.) pv = $12,000 and fv = $865,000
so i find what $12,000 would be in 30 years with 10% interest by doing
12000(1.10)^10 = 209392.82 (EQ1)
then i subtract the two numbers.
865000-209392.82 = 655607.18 so this is the amount i have for the fv after accounting for the 12000
so then i use EQ2 to find the annuity for each year.
655607.18 = A * {[(1.10)^10 - 1] / .10]
655607.18 = A * (164.4940227)
A = 3985.60
so for the first one i get $3985.60
Answer 2.) pretty much the same stuff but im getting messed up on the $1000 stuff and accounting for that and other complications here is what i did so far.
i got to the point like the first answer for accounting for the 12000 so my fv is 655607.18 but how do i account for the $1,000 for 10 years and the 20 years after the previous 10? And how do i find the annuity amount after years 10? im so lost on this one? please help!!
