You expect to retire in forty-five years. When you retire, you expect to have $2,200,000 saved....

Question

Question

Answer 1

Answer #1

Answer:

Present worth will be calculated as:

Present Value (P)=C/{[(1+r)^n]}

Where,

C=Future Value= 2200000

r=ROI=1.26%/2= 0.0063 (Divided by two for semi-annual compounding)

n=No. of periods=45*2= 90 (Multiplied by two for semi-annual compounding)

Now putting values in formula,

= 2200000/{[(1+ 0.0063)^90 ]}

= 2200000/{[( 1.0063)^90 ]}

= 2200000/{[ 1.759837 ]}

= 1250115.4965 (Answer)

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Answer 2

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