Suppose you wish to retire 35 years from today. You determined that you need $120,000 per year after you retire, with the first retirement funds withdrawn one year from the day you retire and that you will need to make 25 such withdrawals. Assuming that you can earn 5% per year on your retirement funds.
a) How much must you deposit in an account today (lump sum), so that you may have enough funds for retirement?
b) If you cannot afford to make a single lump sum deposit, today, to support your retirement. How much must you deposit at the end of each year in an account so that you have enough funds for your desired retirement? Assuming the last deposit will be made on the day you retire in 35 years.