Can anyone answer this question with strictly using the Time Value of Money keys
ID: 2752988 • Letter: C
Question
Can anyone answer this question with strictly using the Time Value of Money keys on the Texas Instruments BAII Plus financial calculator. It is crutial for my exam today, and we are supposed to only put down calculator work.
Mr. Moore is 35 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 25 years so that he can retire at age 60. He expects to live to the maximum age of 80 and wants to be able to withdraw $25,000 per year from the account on his 61st through 80th birthdays (20 withdrawals). The account is expected is expected to earn 10 percent per year for the entire period of time. Determine the size of the annual deposits that must be made by Mr. Moore.
Explanation / Answer
Let annual deposit be x
Future value of annual deposits after 25 years i.e., at the age of 60 years = Present value of withdrawals i.e., at 60 years of age
x . FVAF (10%, 25 years) = 25000 * PVAF (10%, 20 years)
x . 108.18 = 25000 * 9.08
x = 2098.3545
Size of annual deposits = $2098.35