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Mr Jones intends to retire in 20 years at the age of 65. As yet he has not provided for retirement income, and he wants to set up a periodic savings plan to do this. If he makes equal annual payments into savings account that pays 4% interest per year, how large must his payments be to enure that after retirement he will be able to draq $30,000 per year from this account until he is 80?

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  1. - (1/.04) (1-(1/1.04^15) = 11.118387

    - 30,000 x 11.1183 = $333,551.62

    - 333,551.62 / 29.778 = $11,201.27

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