John wants to retire 30 years from now. He doesn’t know how many years he’ll actually live after he retires, so he’d like to save up enough to spend $60,000 per year forever. That way, he can never outlive his retirement savings. How much must he save every year from now until he retires in order to reach his goal? Assume his retirement savings earn 4% per year above the inflation rate.

He will need to deposit $267,451.49 each year.

Explanation:

Giving the following information:

John wants to retire 30 years from now.

He’d like to save up enough to spend $60,000 per year forever.

Interest rate= 4% per year.

The $60,000 per year forever is a perpetual annuity. First, we need to calculate the value of the annuity at the retirement age:

PV= Cf/i

Cf= cash flow

PV(retirement)= 60,000/0.04= $15,000,000

He must collect $15 million in 30 years. We need to calculate the annual deposit required to reach the goal:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (15,000,000*0.04)/ [(1.04^30) - 1]

A= $267,451.49

He will need to deposit $267,451.49 each year.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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