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April 25, 2015

Homework Help: Finance (Engineering Economics)

Posted by Chase on Wednesday, April 4, 2012 at 11:06am.

You wish to retire at 60 and, at the end of each month thereafter for 25 years, to receive $6,000. Assume that you begin making monthly payments into an account at age 23 and continue these payments until age 60. If the annual interest rate is constant at 12 percent, how much must be deposited monthly between ages 23 and 60 for you to receive your $6,000/month for 25 years? Assume monthly compounding throughout.

I am having difficulty with this problem because once you reach the age of 60, the sum of money you have saved between 23 and 60 (whatever amount that is) keeps accruing interest (at 1 % percent a month) while you you withdraw $6000 a month. I don't know how to find the sum of money you need to save between 23 and 60.

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