Question
How much must Manuel have in his investment account on his 65th birthday so that he...
How much must Manuel have in his investment account on his 65th birthday so that he can withdraw $30,000 on that birthday and on each of the next 19 birthdays (interest rate is 8%)?
a. $294,540
b. $318,108
c. $264,540
d. $340,109
e. $288,120
Homework Answers
Answer #1
The required investment amount is calculated using the following present value of annuity(due) equation:
PVA(due)
Where, PVA(due) is the present value of annual payment made at the beginning of each year.
A is annual payment
r is interest rate
n is number number of years
PVA(due) 
= $318108
Therefore, correct answer is option b
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