Question

History Bookmarks People Tab Window Help Wee x B Exam 1 Answer Key - SIX SKM_80819092614180 X Q Fin 221 Flashcards | Qul x C Get Homework Help W X graceprendergast/Desktop/Fa19%20Fin221ex1A.pdf Illinois Mail Self Service Sapling Learning zy 2.1. Programming. compass I SYLLABUS_B: we. P Piazza ID: A 37. You are planning for your retirement and want to have $1,500,000 by the time you retire 45 years from today. You also want to have $250,000 in 20 years to help fund your children's college education. What annual end of the year deposit would you have to make for 45 years into an account paying 8% compounded annually to meet your future goals? A) $4,528 B) $3,881 C) $6,906 D) $8,311 18 You think it would he really neat to walk out on the field at half time of an Illinois home football game to

I know the answer is D, but I am unsure the steps how to solve. Thanks!

Answer 1

rate positively ..

this is two step problem. First we have to compute the future value of 250000 at 45th year (means 25 year of maturity)
Put in calculator
	PV		-250000
	PMT		0
	I		8%
	N		25
	Compute FV	$1,712,118.80
Now, total future value required = 1712118.80+1500000
	Total future value=		$3,212,118.80
We can compute the annual payment with required future value as computed above.
	Put in calculator
	FV		$3,212,118.80
	PV		0
	I		0.08
	N		45
	compute PMT	($8,310.67)
	ans is option A)	8,311