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Paul intends to retire in 15 years and would like to receive $1,500 every month for...

Paul intends to retire in 15 years and would like to receive $1,500 every month for 20 years, starting at the end of the first month in which he retires. How much must he deposit in an account today if interest is 5% compounded annually?

A. $93,834.03

B. $91,834.03

C. $95,755.00

D. $94,334.30

E. $99,134.03

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Answer #1
Present value of retirement benefits at a time of retirement Using present value function in MS excel pv(rate,nper,pmt,fv,type) rate = 5%/12 = .4166% nper =12*20 = 240 pmt = -1500 fv =0 type =0 PV(0.4166%,240,1500,0,0) ($227,303.19)
How much deposit today Using present value function in MS excel pv(rate,nper,pmt,fv,type) rate = 5% nper =15pmt = 0 fv =227303.19 type = 1 PV(5%,15,0,227303.19,1) ($109,336.72)
How much deposit today -109336.721
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