John Fillmore’s lifelong dream is to own his own fishing boat to use in his reti

Question

John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $409,900. He estimates that the boat he wants will cost $327,300 when he retires in 5 years. (Use the tables below.) Assuming quarterly compounding of amounts invested at 12%, how much of John Fillmore’s inheritance must be invested to have enough at retirement to buy the boat? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Explanation / Answer

Answer : John Fillmore’s inheritance must be invested to have enough at retirement to buy the boat =$ 185719.8

Working notes for the above answer

We have provided with the information as follow

John has recently come into an inheritance of $409,900

boat he wants will cost $327,300 when he retires in 5 years.

Assuming quarterly compounding of amounts invested at 12%,

We will find out Prasent value factror @ 12 % for 5 years nad it is = 0.56743

PV= $327,300 * 0.56743

=$ 185719.8

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