[SOLVED] Bob invested $2,000 in an investment fund on his 21st birthday. The fund pays 7%interest compounded – Accounting

by | Jul 12, 2022 | Accounting

Bob invested $2,000 in an investment fund on his 21st birthday. The fund pays 7%interest compounded semiannually. Bob is celebrating his 50th birthday today. Bobdecides he wants to retire on his 60th birthday and he wants to withdraw $75,000 peryear, the first withdrawal on his 60th birthday and the last withdrawal on his 90thbirthday. Bob expects to receive $100,000 from his employer on his 55th birthday inrecognition of his long service to the company. Assume Bob has not taken any moneyout of his investment fund since he initially funded it on his 21st birthday, and that hewill deposit the $100,000 from his employer into the investment fund on his 55thbirthday. The investment fund will be used to pay for Bob’s retirement.a. If Bob makes no additional deposits into his investment fund, how much will beavailable for retirement at age 60?b. Since the amount in (a) is insufficient to meet his retirement goals, Bob decidesto deposit equal annual amounts into the investment fund beginning on his 51stbirthday and ending on his 59th birthday, so that he can meet his retirementgoals. How much will each deposit be?



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