Austin Miller wishes to have $200,000 in a retirement fund 25 years from now. He can...

Austin Miller wishes to have $200,000 in a retirement fund 25 years from now. He can create the retirement fund by making a single lump-sum deposit today. Use next table to solve the following problems.

If upon retirement in 25 years, Austin plans to invest $200,000 in a fund that earns 10%, what is the maximum annual withdrawal he can make over the following 15 years? Round the answer to the nearest cent. Round PVA-factor to three decimal places.
Calculate your answer based on the PVA-factor.
$

Calculate your answer based on the financial calculator.
$
How much would Austin need to have on deposit at retirement in order to withdraw $55,000 annually over the 15 years if the retirement fund earns 10%? Round the answer to the nearest cent. Round PVA-factor to three decimal places.
Calculate your answer based on the PVA-factor.
$

Calculate your answer based on the financial calculator.
$
To achieve his annual withdrawal goal of $55,000 calculated in part b, how much more than the amount calculated in part a must Austin deposit today in an investment earning 10% annual interest? Round PVA-factor to three decimal places. Round your answer to the nearest cent. If an amount is zero, enter "0".
$

Expert Solution

PVA Factor method

a	PV of annuity = Annuity*(1-1/(1+rate)^number of terms)/rate
	PVA factor= (1-1/(1+rate)^number of terms)/rate
	PVA Factor	7.606079506
	Maximum withdrawal	26294.76

b	PV of annuity = Annuity*(1-1/(1+rate)^number of terms)/rate
	PVA factor= (1-1/(1+rate)^number of terms)/rate
	PVA Factor	7.606079506
	Amount of deposit required	418334.37

c	Difference in final amount	218334.37

	Future Value of annuity = A* ((1+rate)^n-1)/rate
	FVA factor	98.34705943
	Amount of deposits required	2220.039665

WORKINGS

Financial calculator method

1: Using financial calculator

Input: PV = 200000, N = 15, I/Y = 10. Solve for PMT as 26294.76

2: Using financial calculator

Input: PMt = 55000, N = 15, I/Y = 10. Solve for PV as 418334.37

3:

Difference in final amount

218334.37

Using financial calculator

Input FV = 218334.37, N= 25, I/Y = 10 Solve for PMT = 2,220.04

jeff jeffy answered 3 months ago

Chris Jones wishes to have $200,000 in a retirement fund 30 years from now. He can...

Chris Jones wishes to have $200,000 in a retirement fund 30 years from now. He can create the retirement fund by making a single lump-sum deposit today. Use next table to solve the following problems. If he can earn 8 percent on his investments, how much must Chris deposit today to create the retirement fund? Round PV-factor to three decimal places. Round your answer to the nearest cent. Calculate your answer based on the PV-factor. $ Calculate your answer based...

Daryl Kearns saved $200,000 during the 25 years that he worked for a major corporation. Now...

Daryl Kearns saved $200,000 during the 25 years that he worked for a major corporation. Now he has retired at the age of 50 and has begun to draw a comfortable pension check every month. He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an initial payment of $190,000. The following table presents the estimated cash inflows for the two alternatives: Year 1 Year...

Daryl wishes to save money to provide for his retirement. Beginning one month from now, he...

Daryl wishes to save money to provide for his retirement. Beginning one month from now, he will begin depositing a fixed amount into a retirement savings account that will earn 12% compounded monthly. He will make 360 such deposits. Then, one year after making his final deposit, he will withdraw $100,000 annually for 25 years. The fund will continue to earn 12% compounded monthly. How much should the monthly deposits be for his retirement plan? A) 189.58 B) 199.58 C)...

Tom Miller owns a house that he bought 5 years ago for $200,000. He financed the...

Tom Miller owns a house that he bought 5 years ago for $200,000. He financed the purchase with an 80% LTV loan at 7% interest and a 30-year amortization term with monthly payments. Interest rates have since fallen and a new loan (which is equal to the balance of the original loan) is now available at 5.25% interest rate with 4 discount points and is amortized over 25 years with monthly payments. Neither mortgage requires a prepayment penalty. Assume that...

A man wishes to provide a fund for his retirement such that from his 60th to...

A man wishes to provide a fund for his retirement such that from his 60th to 70th birthdays he will be able to withdraw equal sums of ₱18,000 for his yearly expenses. He invests equal amounts for his 41st to 59th birthdays in a fund earning 10% compounded annually. How much should each of these amounts be?

You want to accumulate $1 million by your retirement date, which is 25 years from now....

You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, with the first occurring today. The bank pays 8% interest, compounded annually. You expect to receive annual raises of 3%, which will offset inflation, and you will let the amount you deposit each year also grow by 3% (i.e., your second deposit will be 3% greater than your first, the third will be 3% greater than...

Ann is now 25 years old and she is planning to start saving for retirement.

Problem: Saving for Retirement Ann is now 25 years old and she is planning to start saving for retirement. She expects her income of $60,000 in the coming year to grow at the (nominal) rate of 5% a year until she retires at the age of 65. She wants to save a fixed percentage of her income per year. She wants to save enough money to be able to consume per year 50% of her income (in real terms) just before...

A man plans to retire in 25 years and spend 35 years in retirement. He currently...

A man plans to retire in 25 years and spend 35 years in retirement. He currently earns $82,500 before-tax annually, which increases annually with the level of inflation. He has determined that he needs 70% of his pre-retirement income for his retirement years. He currently has $282,000 in his RRSP account and $10,000 in a non-registered account. He will earn 5.50% before retirement and during retirement he will readjust his portfolio to be more conservative earning 3.50%. Inflation is 2%...

A person wishes to have $27,500 cash for a new car 4 years from now. How...

A person wishes to have $27,500 cash for a new car 4 years from now. How much should be placed in an account now, if the account pays 4.2% annual interest rate, compounded weekly? $ (Round to the nearest dollar)

Finance. A person wishes to have $21,900 cash for a new car 7 years from now....

Finance. A person wishes to have $21,900 cash for a new car 7 years from now. How much should be placed in an account now, if the account pays 5.5% annual interest rate, compounded weekly?

Question