Hello I have a question regarding TVM. This is the question with the additional

Question

Hello I have a question regarding TVM. This is the question with the additional information:

Although you are young, you are already thinking about retirement. You have decided you want to retire in 25 years from now. You want to live on a retirement of $90,000 per year. You figure you will live about 45 years on that retirement (you work-out on a regular basis, and live a healthy lifestyle). While on retirement, you think you can earn 6% on investments. We will work through this problem a step at a time.

My question is this: Does the question "How much wil you have to have in "'the bank' at retirement if you wanted to withdraw $90,000 per year over 45 years of retirement, assuming the balance is earning 6% per year (compounded annually)? Indicate that you are finding present value or future value.

Explanation / Answer

Total amount on retirement =$90,000*45 years

                                                    =$4,050,000

Now, compute the present value of the future value is as follows:

=$4,050,000*Present value factor at 6% for 25 years

=$4050000*0.2300

=$931,500

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.