Question

In planning for your retirement, you would like to withdraw $80,000 per year for 13 years. The first withdrawal will occur 20 years from today. Click here to access the TVM Factor Table Calculator x Incorrect What amount must you invest today if your return is 10% per year? $.. Round entry to the nearest dollar. Tolerance is 4. X Incorrect What amount must you invest today if your return is 15% per year? $ 13 Round entry to the nearest dollar. Tolerance is 14.

Answer 1

Ans:

Value of time of retirement at 10% discount rate:

=80,000*{1+ (1/(1+0.10)^n-1)}

=80,000*{1+ (1/(1+0.10)^13-1)}

=80000*7.8137

=625096

Value of time of retirement at 10% discount rate is $625096

Now, amount you must deposit today is calculated below:

Value of deposit = $625096/ (1 + 10%) ^ 20

= 625096/ 6.7275

= $92916.54

=92917(if rounded off)

Amount required to deposit today is $92917

Value of time of retirement at 15% discount rate:

=80,000*{1+ (1/(1+0.15)^n-1)}

=80,000*{1+ (1/(1+0.15)^13-1)}

=80000*6.4206

=513,648

Value of time of retirement at 15% discount rate is $513,648

Now, amount you must deposit today is calculated below:

Value of deposit = $513,648/ (1 + 15%) ^ 20

= 513648/16.3665

= $31384.11

=31384 (if rounded off)

Amount required to deposit today is $31384