Question

You have decided to plan your career so that you can take 3 years off in 15 years to travel the world. You plan is to deposit $12,000 per year for 15 years, then withdraw$30,000/year for three years (for you trip). Then when you come back will get a job again and deposit $9000/year for the remaining 10 years of your work. How much money will you have at retirement in 28 years if you can earn 10%/year?

Answer 1

To calculate the amount of money you will have at retirement in 28 years, calculate the future value of the deposits, withdraws, and the compound interest. You will have $253,340.21 at retirement in 28 years if you can earn 10% per year.

Step-by-step explanation:

To calculate the amount of money you will have at retirement in 28 years, we need to consider the deposits, withdrawals, and the compound interest.

First, let's calculate the future value of the deposits you will make over the 28 years. You will deposit $12,000 per year for 15 years, and $9,000 per year for the remaining 10 years. Using the formula for future value of annuity, the future value of the deposits is:

$12,000 * [(1 + 0.1)^15 - 1] / 0.1 + $9,000 * [(1 + 0.1)^10 - 1] / 0.1 = $336,207.83.

Next, let's calculate the future value of the withdrawals you will make during the 3 years of travel. You will withdraw $30,000 per year for 3 years. Using the same formula as before, the future value of the withdrawals is:

$30,000 * [(1 + 0.1)^3 - 1] / 0.1 = $82,867.62.

The final step is to add the future value of the deposits and subtract the future value of the withdrawals from it:

$336,207.83 - $82,867.62 = $253,340.21.

Therefore, you will have $253,340.21 at retirement in 28 years if you can earn 10% per year.