In: Finance
How much money does Suzie need to have in her retirement savings account today if she wishes to withdraw $42,000 a year for 25 years? She expects to earn an average rate of return of 9.55 percent.
Group of answer choices
$394,819.18
$407,419.81
$385,160.98
$390,202.69
$388,683.83
Money needed today = Amount/(1+ rate )^1 + Amount/(1+ rate )^2 +Amount/(1+ rate )^3 +Amount/(1+ rate )^4 +Amount/(1+ rate )^5 +............... Amount/(1+ rate )^24 +Amount/(1+ rate )^25
Money needed today = 42000/(1+0.0955)^1 + 42000/(1+0.0955)^2 +42000/(1+0.0955)^3 +42000/(1+0.0955)^4 +42000/(1+0.0955)^5 +42000/(1+0.0955)^6 +42000/(1+0.0955)^7 +42000/(1+0.0955)^8 + ......... 42000/(1+0.0955)^24 +42000/(1+0.0955)^25
= 394819.18 Answer
The first option is correct.