Business, 17.02.2020 22:41 jenesis8

Jerry and Donald are two brothers with the same birthday. Today is Jerry’s 30th birthday and Donald’s 25th birthday. Donald has been saving for retirement ever since his 20th birthday, when he started his retirement account with a $10,000 contribution. Every year since, Donald has contributed $5,000 to the account on his birthday. He plans to make the 40th, and final, $5,000 contribution on his 60th birthday, after which he plans to retire. In other words, by the time Donald has made all of his contributions he will have made one contribution of $10,000 followed by 40 annual contributions of $5,000.

Jerry plans to retire on the same day (which will be his 65th birthday); however, until now, he has saved nothing for retirement. Jerry’s plan is to start contributing a fixed amount each year on his birthday; the first contribution will occur today. Jerry’s 36th, and final, contribution will occur on his 65th birthday. Jerry’s goal is to have the same amount when he retires at age 65 that Donald will have at age 60. Assume that both accounts have an expected annual return of 12 percent. How much does Jerry need to contribute each year in order to meet his goal?

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Jerry and Donald are two brothers with the same birthday. Today is Jerry’s 30th birthday and Donald’...

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