Janet Woo decided to retire to Florida in 6 years. What amount should Janet invest today so she can withdraw $51,500 at the end

Question

3 years ago

11

Janet Woo decided to retire to Florida in 6 years. What amount should Janet invest today so she can withdraw $51,500 at the end

of each year for 20 years after she retires? Assume Janet can invest money at 6% compounded annually. (Use the Table 13.2 and Table 12.3.) Present value ??

Mathematics

1 answer:

Elina [12.6K] · Answer 1 · 2022-09-08T04:10:26+03:00

Answer:

$293,562.707

Step-by-step explanation:

As for the provided details we know,

Janet needs $51,500 from end of 7th year for upcoming 20 years.

The present value of 20 installments of $51,500 shall be @ 6% from year 7 to year 8.0858

Thus total value = $51,500 $\times$ 8.0858 = $416,418.7

Now the compound interest factor for 6 year @ 6 % = 1.4185

Thus, value to be invested today = $416,418.70/1.4185 = $293,562.707

As this when compounded annually will provide the balance as required at the end of 6 years.