[jackstrong]

John Adams is the CEO of a nursing home in San Jose. He is now 50 years old and plans to retire in 10 years. He expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $40,000 has today (he realizes that the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then get 24 additional annual payments. Inflation is expected to be 5 percent per year for 10 years (ignore inflation after John retires); he currently has $100,000 saved up, and he expects to earn a return on his savings of 8 percent per year, annual compounding. To the nearest dollar, how much must he save during each of the next 10 years (with deposits being made at the end of each year) to meet his retirement goal? (Hint: the inflation rate 5 % per year is used only to calculate desired retirement income.)

[smoothy]

Since this is obviously cut and pasted homework... what do you think the answer is and how did you arrive at it?

[jackstrong]

I have no idea sir, the VA has not approved a tutor for me and this is an online class. I am not sure which formula to use, or if it takes multiple formula usage to derive an answer.