Question

Burton Bush wants to retire in Arizona when he is 80 years of age. Burton, who is now 55, believes he will need $500,000 to retire comfortably. To date, he has set aside no retirement money. If he gets an interest rate of 6% compounded annually, he will have to invest today (use the tables in the handbook):__________

Answer 1

Answer:

$116,499.15

Explanation:

To find the amount he will have to invest today, we have to find the present value of $500,000 at the 6% interest rate

PV = FV (1+r)^-n

PV = Present value

FV = Future value = $500,000

R = interest rate = 6%

N = number of years = 25

$500,000 ( 1 + 0.06) ^-25 = $116,499.15

I hope my answer helps you