Assume that your father is now 55 years old and plans to retire after 5 years from now.
He is expected to live for another 15 years after retirement. He wants a fixed retirement
income of Rs. 1,00,000 per annum. His retirement income will begin the day he retires,
5 years from today, and then he will get 14 additional payments annually. He expects to
earn a return on his savings @ 10% p.a., annually compounding. How much (to the
nearest of rupee) must your father save today to meet his retirement goal?
P = Amount required annually = 100000
n = 15 years
r = return = 10%
Amount required at retirement:
Calculation of Annual savings:
n = 5 years
r = annual return = 10%
Let p is Annual Savings required, then: