You have met with a financial planner to discuss some or your financial goals. Y

Question

You have met with a financial planner to discuss some or your financial goals. You have decided that you will need the following

1. Three years form today you will need $40000 for the down payment on a house

2. You would like to have $10000 for a trip to Hawaii two years from today.

3. You plan to retire 40 years from today, you believe that $2000000 would be sufficient to meet your needs during retirement.

4. You want to establish a perpetual university scholarship fund that pays $5000.

If you can invest in an account that pays 6% per year(compounded annually) how much( total) money do you need to set aside today in order to meet these 4 needs?

Explanation / Answer

present value of required amount

= 40000/(1+6%)^3 + 10000/(1+6%)^2 + 2000000/(1+6%)^40 + 5000/(6%)

= 320262.45

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