Question

answer scenario 3 pls & explain how you got your answer/ show your work

1x) P12-55A (similar to) Question Help Solve various time value of money scenarios. (Click the icon to view the scenarios.) (Click the icon to view the present value of $1 table.) (Click the icon to view the present value of annuity of $1 table.) (Click the icon to view the future value of $1 table.) (Click the icon to view the future value of annuity of $1 table.) Scenario 1. Harold just hit the jackpot in Las Vegas and won $50,000! If he invests it now at a 14% interest rate, how much will it be worth in 20 years? (Round your answer to the nearest whole dollar.) Future value = $ 687,174 Scenario 2. Hunt would like to have $4,000,000 saved by the time he retires in 40 years. How much does he need to invest now at a 14% interest rate to fund his retirement goal? (Round your answer to the nearest whole dollar.) Present value = $ 21,177 Scenario 3. Assume that Lilian accumulates savings of $1 million by the time she retires. If she invests this savings at 8%, how much money will she be able to withdraw at the end of each year for 15 years? (Round your answer to the nearest whole dollar and enter as a positive amount.) Amount able to withdraw = $ 3172169

Answer 1

scenario 3

Present value = $1,000,000

Interest rate (i) = 8%

Time period (n) = 15 years

Amount to be withdrawn at the end of each year = ?

Present value annuity factor (8%, 15) = 8.55948

Present value = Amount to be withdrawn at the end of each year x Present value annuity factor (8%, 15)

1,000,000 = Amount to be withdrawn at the end of each year x 8.55948

Amount to be withdrawn at the end of each year = $116,830

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