Al Corbin Is 25 Years Old Today and He Wishes

question 61

Multiple Choice

Al Corbin is 25 years old today and he wishes to accumulate enough money over the next 35 years to provide for a 20 year retirement annuity of $100,000 at the beginning of each year, starting with his 60th birthday.He can save $2,000 at the end of each of the next 10 years and $3,000 each year for the following 10 years.How much must he save each year at the end of years 21 through 35 to obtain his goal? Assume that the average rate of return over the entire period will be 10%.

• A)$9,642
• B)$26,969
• C)$12,321
• D)$24,289

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Definitions:

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding costs related to production or acquisition of goods.

Rate of Return

The percentage gain or loss on an investment over a specified time period.

Operating Cash Flow

Cash generated from a company's regular operational activities, reflecting its ability to generate cash from its core business operations.

Top-Down Approach

A method of analysis that starts with the broader economy or large investment categories and works its way down to individual stocks or securities.