Question

Charlie Stone wants to retire in 30 years, and he wants to have an annuity of $1,000 a year for 20 years after retirement. Charlie wants to receive the first annuity payment at the end of the 30th year. Using an interest rate of 10%, how much must Charlie invest today in order to have his retirement annuity (round to the nearest $10)? No spreadsheet answer please.

Answer 1

Present value of all retirement withdraw at the end of 30 years

=(1000*((1-(1+10%)^(-20))/10%))*(1+10%)

=9364.92

how much must Charlie invest today in order to have his retirement annuity

=9364.92/(1+10%)^30

=536.69

the above will be answer..