MA170wk7solns - MA170 Week 7 Report: Other Simple...

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MA170 Week 7 Report: Other Simple Annuities; Finding the Term Name: Lab: Fall 2010 1. [7 marks ] A couple would like to save up enough money for retirement so that they will be able to withdraw $1000 each month for 30 years. The couple plan to retire in approximately 35 years and would like to begin making monthly deposits into their retirement fund immediately. Assume that their investment can earn interest at a rate of 3% compounded monthly. A = 1000 0 B B B @ 1 1 + 0 : 03 12 ± 12(30) 0 : 03 12 1 C C C A : = $237189 : 38 (b) How much money must they have at the time of their retirement to allow for the aforementioned monthly withdrawals? Last payment made one month before retirement, thus at retirement the couple will have saved: 237189 : 38 1 + 0 : 03 12 ± : = $237782 : 35 (c) Determine the size of the monthly deposits that will be required to accumulate the enough money for retirement assuming that the couple will begin immediately. R s n e i = 237782 : 35 = R 1 + 0 : 03 12 ± 0 B B B @ 1 + 0 : 03 12 ± 35(12) 1 0 : 03 12 1 C C C A ) R : = $319 : 85 2. [9 marks ] On her 40th birthday Maria comes into an inheritance of $50 000. She is considering investing some or all of the money into a fund for retirement. Maria plans to retire on her 65th birthday. While in retirement she
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This note was uploaded on 03/03/2012 for the course MATH 170 taught by Professor F.vinette during the Fall '11 term at Wilfred Laurier University .

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MA170wk7solns - MA170 Week 7 Report: Other Simple...

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