Math

Jim Hunter decided to retire to Florida in 10 years. What amount should Jim invest today so that he will be able to withdraw $25,000 at the end of each year for 30 years after he retires. Assume he can invest money at 9% interest compounded annually. (Using the Tables)

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  3. 👁 808
  1. Pt = $25000/yr * 30rs = $750,000 = Amt.
    in the account after 10 yrs.

    Pt = Po(1+r)^n.

    r = 9%/100% = 0.09 = APR expressed as a decimal.

    n=1 comp./yr * 10yrs = 10 Compounding periods.

    Po(1.09)^10 = 750,000.
    Po = 750000 / (1.09)^10 = $316,808.11.
    = Initial deposit.

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  2. 50,000

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    2. 👎 1
  3. A2=25000[1 - (1.09)^-30]/0.09= $256,841.35
    256,841.35=A1(1.09)^10; A1= $108,492.56

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