You Are Currently 25 Years of Age

question 102

Essay

You are currently 25 years of age.You have developed a lifetime budget that includes $50,000 at age 40 for a college fund for your kids and $25,000 per year for 20 years to supplement your retirement,the first payment on your 60^th birthday and the last payment on your 79^th birthday.You open an investment account on your 25^th birthday that promises to pay 9% interest compounded annually.You want to deposit equal annual amounts into the account every year on your birthday,starting today (your 25^th birthday)and continuing until you are 40 years old (i.e.,the last deposit is made on your 40^th birthday).How much will each deposit have to be if you want to meet your financial goals?

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Definitions:

Notes Payable

Short-term or long-term liabilities in the form of written promises to pay a specified amount with interest by a certain date.

Fixed Assets/Sales Ratio

A financial metric that indicates how efficiently a company is using its fixed assets to generate sales.

Financial Forecast

A prediction of future revenues, expenses, and profits, often used to make informed business decisions.

Financial Planning Models

Quantitative models used to project financial components such as revenue, expenses, and cash flow over a period, aiding in business strategy and decision-making.