In: Finance
How much money does Mandy need to deposit into her investment account today if she wishes to withdraw $80,000 a year for 20 years, starting at the end of the year? She expects to earn an average rate of return of 10 percent. $703,287.38 $681,085.10 $904,298.28 $805,298.40
Answer:$681,085.10
The amount she has to deposit can be determined by finding out the Present Value of annuity.
Excl can be used to serve this purpose.The function used =PV()
The number of years =20 the interest rate =10% The withdrawal amount(annual payments)=$80,000
The Formula used =PV(B3,B2,-B4) we get the amount to be deposited as $681,085.10