Time Value of Money – Annuity

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     An individual is now
50 years old, that he plans to retire in 10 years, and that he expects to live
for 25 years after he retires, that is, until he is 85. He wants a fixed annual
retirement income of $65,156. His retirement income will begin the day he
retires, 10 years from today, and he will then get 24 additional annual
payments. He currently has $100,000 saved up; and he expects to earn a return
on his savings of 8 percent per year, annual compounding. To the nearest
dollar, how much must he save during each of the next 10 years (with deposits
being made at the end of each year) to meet his retirement goal?