Question

You are a financial adviser working with a client who wants to retire in eight years. The client has a savings account with a local bank that pays 8% annual interest. The client wants to deposit an amount that will provide her with $1,003,500 when she retires. Currently, she has $301,400 in the account. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) How much additional money should she deposit now to provide her with $1,003,500 when she retires? (Round your answer to nearest whole dollar.)

Answer 1

Retirement amount required after 8 year =		$      1,003,500
Present value of retirement amount today =	$         542,160
1,003,500/(1+8%)^8
Money already in hand =			$         301,400
further amount required today to invest =		$         240,760
Ans =					$         240,760