Question

Your goal is to be able to withdraw $5,800 for each of the next eight years...

Your goal is to be able to withdraw $5,800 for each of the next eight years beginning one year from today. The return on the investment is expected to be 10%. The amount that needs to be invested today is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.)

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Homework Answers

Answer #1

Amount to be withdrawn annually = $5,800

Time period (n)= 8 years

Interest rate (i) = 10%

Amount to be invested today = ?

Amount to be invested today = Amount to be withdrawn annually x Present value of annuity factor ( i%, n)

= 5,800 x Present value of annuity factor ( 10%, 8)

= 5,800 x 5.33493

= $30,943

Note: Exact answer may slightly differ due to rounding off and factor value considered

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

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