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 | ||||

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