RETIREMENT PROBLEM

Interest 8%
Annual Deposit 29386.551001
Annual retirement Withdrawl 30000

Account Deposit at Interest

Balance, the Earned
Beginning of Beginning of During the
Year the Year Year Year Total in Account, end year
1 0.00 29386.55 2350.92 31737.48
2 31737.48 29386.55 4889.92 66013.95
3 66013.95 29386.55 7632.04 103032.54
4 103032.54 29386.55 10593.53 143012.62
5 143012.62 29386.55 13791.93 186191.10
6 186191.10 -30000.00 12495.29 168686.39
7 168686.39 -30000.00 11094.91 149781.30
8 149781.30 -30000.00 9582.50 129363.81
9 129363.81 -30000.00 7949.10 107312.91
10 107312.91 -30000.00 6185.03 83497.94
11 83497.94 -30000.00 4279.84 57777.78
12 57777.78 -30000.00 2222.22 30000.00
13 30000.00 -30000.00 0.00 0.00

RETIRE

Solutio

Interest
Annual Deposit
Annual Retirement Withdrawl

Numerator

Denominator
Annual Deposit
 WITH SOLVER FUNCTION
Interest 8%
Annual Deposit 29386.5510006133
Annual retirement Withdrawl 30000

Account Balance,
Beginning of the
Year Year
1 0.00
2 31737.48
3 66013.95
4 103032.54
5 143012.62
6 186191.10
7 168686.39
8 149781.30
9 129363.81
10 107312.91
11 83497.94
12 57777.78
13 30000.00

RETIREMENT PROBLEM

Solution Using Formulas

8%
48000
30000

<=1/(1+i)^n*PV(rate,no. of
126718.535 Deposits,Annual Retirement
Withdrawl)
4.312 <=PV
29386.551 <=Numerator/Denominator
WITH SOLVER FUNCTION

Deposit at the Interest Earned Total in Account,

Beginning of Year During the Year end year
29386.55 2350.92 31737.48
29386.55 4889.92 66013.95
29386.55 7632.04 103032.54
29386.55 10593.53 143012.62
29386.55 13791.93 186191.10
-30000.00 12495.29 168686.39
-30000.00 11094.91 149781.30
-30000.00 9582.50 129363.81
-30000.00 7949.10 107312.91
-30000.00 6185.03 83497.94
-30000.00 4279.84 57777.78
-30000.00 2222.22 30000.00
-30000.00 0.00 0.00
 MULTIPLE COMPOUNDING PERIODS
Initial Deposit 1000
Interest rate 5%
Number of Compoundings per Year 2
Interest per Compounding Period 2.500%
Accretion inOne Year 1050.625 <= ID*(1+ICP)^NCY
Continuous Compounding with EX 1051.271 <= ID*EXP(Rate)

Compounding periods per Year End-year Accretion Effect of

1 1050.000 1051.500

2 1050.625
1051.000
10 1051.140

End-Year Accretion
20 1051.206 1050.500
50 1051.245
100 1051.258 1050.000
150 1051.262
1049.500
300 1051.267
800 1051.269 1049.000
1
Num
G PERIODS

Effect of Compounding Interval

1051.500

1051.000
End-Year Accretion

1050.500

1050.000

1049.500

1049.000
1 10 100 1000
Number of Compounding Intervals
 CONTINUOUS DISCOUNTING
Interest 8%

Contionuously
Year Cash Flow
Discounted PV
1 100 92.31
2 200 170.43
3 300 235.99
4 400 290.46
5 500 335.16

Present Value 1124.35

 USING XIRR TO COMPUTE THE
ANNUALIZE INTERNAL RATE OF RETURN
Date Cash Flow
1-Jan-06 -1000
3-Mar-06 150
4-Jul-06 100
12-Oct-06 50
25-Dec-06 1000

IRR 37.19%
USING XNPV TO COMPUTE NET
PRESENT VALUE
Annual Discount Rate 12%

Date Cash Flow

1-Jan-06 -1,000
3-Mar-07 100
4-Jul-07 195
12-Oct-08 350
25-Dec-09 800

Net Present Value 16.80