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You started to save for your retirement by setting up your personal retirement plan at age 25. You deposited an initial payment, P at the end first year and increased that amount in subsequent years by 3% inflation rate. You earned 5% APR interest on your account and continued for 40 years until your retirement. At your retirement, you had saved $377,795.09. What was the initial deposit that you started with? Need some help on this one. Thank you.

 Dec 13, 2018

Best Answer 

 #1
avatar+17184 
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Initial Payment = FV [  (r-g) / ( 1+r)^n - (1+g)^n) ]      r = .05  g = .03  n = 40   FV = 377795.09

                         = 1999.999 ~~~ $2000.

 Dec 13, 2018
 #1
avatar+17184 
+2
Best Answer

Initial Payment = FV [  (r-g) / ( 1+r)^n - (1+g)^n) ]      r = .05  g = .03  n = 40   FV = 377795.09

                         = 1999.999 ~~~ $2000.

ElectricPavlov Dec 13, 2018

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