You are a financial adviser working with a client who wants to retire in eight y

Q: You are a financial adviser working with a client who wants to retire in eight y

Solution: Let additional deposit = X Interest rate = 8% Period = 8 Years Now Future value after 8 years = $1,009,500 P * (1+i)^t = $1,009,500 ($303,800 + X) * (1+0.08)^8 = $1,009,500 ($303,800 + X) = $545,401 X = $241,601 Therefore additional deposit amount = $241,601.

ID: 2395595 • Letter: Y

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 $1,009,500 when she retires. Currently, she has $303,800 in the account. (FV of $1, PV of $1, FVA of $1, and PVA of S1) (Use the appropriate factor(s) from the tables provided.) How much additional money should she deposit now to provide her with $1,009,500 when she retires? (Round your answer to nearest whole dollar.) Additional deposit amount

Explanation / Answer

Solution:

Let additional deposit = X

Interest rate = 8%

Period = 8 Years

Now Future value after 8 years = $1,009,500

P * (1+i)^t = $1,009,500

($303,800 + X) * (1+0.08)^8 = $1,009,500

($303,800 + X) = $545,401

X = $241,601

Therefore additional deposit amount = $241,601.

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You are a financial adviser working with a client who wants to retire in eight y

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