Your Client Just Turned 75 Years Old and Plans on Retiring

question 53

Multiple Choice

Your client just turned 75 years old and plans on retiring in 10 years on her 85th birthday.She is saving money today for her retirement and is establishing a retirement account with your office.She would like to withdraw money from her retirement account on her birthday each year until she dies.She would ideally like to withdraw $50,000 on her 85th birthday,and increase her withdrawals 10 percent a year through her 89th birthday (i.e. ,she would like to withdraw $73,205 on her 89th birthday) .She plans to die on her 90th birthday,at which time she would like to leave $200,000 to her descendants.Your client currently has $100,000.You estimate that the money in the retirement account will earn 8 percent a year over the next 15 years.Your client plans to contribute an equal amount of money each year until her retirement.Her first contribution will come in one year;her tenth and final contribution will come in ten years (on her 85th birthday) .How much should she contribute each year in order to meet her objectives?

• A) $12,401.59
• B) $12,998.63
• C) $13,243.18
• D) $13,759.44
• E) $14,021.53

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Definitions:

Amino Acids

Organic compounds that serve as the building blocks for proteins, containing both amine and carboxyl functional groups.

Proteins

Large, complex molecules made up of amino acids that play critical roles in the body, including in structures, enzymes, and immune responses.

Enzyme-reactant Interaction

The specific process by which an enzyme binds to a reactant, or substrate, to catalyze a biochemical reaction.

Lock-and-key Mechanism

A model for enzyme-substrate interaction suggesting that the enzyme and substrate possess specific complementary geometric shapes that fit exactly into one another.