A couple will retire in 50 years; they plan to spend about $24,000 a year in retirement, which should last about 25 years. They believe that they can earn 7% interest on retirement savings.
a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual payment ------- $?
b. How would the answer to part (a) change if the couple also realizes that in 20 years they will need to spend $54,000 on their child’s college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual payment -------- $?