Assume that today is January 1, 2022, and that you just turned 25 years old. You plan to retire when you turn 65 years old. Beginning that day, you will take retirement draws of $71,923 at the beginning of each year. You expect to live a total of 18 years once you retire. Your money will continue to earn 8% during your retirement years. How much money will you need in your retirement account as of the date you retire (when you turn 65 years old) in order to cover your retirement draws over the next 18 years?

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A:

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.