Assume you want to retire early at age 53. You plan to save using one of the following two strategies: (1) save $3,600 a year in an IRA beginning when you are 23 and ending when you are 53 (30 years) or (2) wait until you are 38 to start saving and then save $7,200 per year for the next 15 years. Assume you will earn the historic stock market average of 14% per year. (Click the icon to view the future value annuity factor table.) (Click the icon to view the future value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value factor table.) Read the requirements. Requirement 1. How much out-of-pocket cash will you invest under the two options? Calculate how much out-of-pocket cash you will invest under the two options. Option 1: Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 8.394 Period 6 Period 7 Period 8 Period 9 Period 10 Future Value of Annuity of $1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.010 2.020 2.030 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 4.060 4.122 4.184 4.246 4.310 4.375 4.506 4.641 4.779 4.921 5.066 5.215 5.368 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 6.152 6.308 6.468 6.633 6.802 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 7.214 7.434 7.662 7.898 8.142 8.923 9.487 10.089 10.730 11.414 12.142 12.916 8.286 8.583 8.892 9.214 9.549 9.897 10.637 11.436 12.300 13.233 14.240 15.327 16.499 9.369 9.755 10.159 10.583 11.027 11.491 12.488 13.579 14.776 16.085 17.519 19.086 20.799 10.462 10.950 11.464 12.006 12.578 | 13.181 14.487 15.937 | 17.549 19.337 21.321 25.959 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 12.683 13.412 14.192 | 15.026 15.917 16.870 18.977 21.384 24.133 27.271 30.850 34.931 39.581 13.809 14.680 15.618 16.627 | 17.713 18.882 21.495 24.523 28.029 32.089 36.786 42.219 48.497 14.947 15.974 17.086 18.292 19.599 21.015 24.215 27.975 32.393 37.581 43.672 50.818 59.196 16.097 | 17.29318.599 20.024 21.579 23.276 27.152 31.772 37.280 43.842 51.660 60.965 72.035 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 | 72.052 91.025 115.380 146.628 186.688 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 34.785 40.568 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 1,181.882 48.886 60.402 75.401 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757 4,163.213 7,343.858 23.521 Period 11 Period 12 Period 13 Period 14 Period 15 Period 20 Period 25 Period 30 Period 40 Print Done Reference Present Value of Annuity of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 0.990 1.970 2.941 3.902 4.853 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 6.472 6.230 6.002 5.786 5.5825.206 4.868 4.564 4.288 4.039 7.325 | 7.020 6.733 6.463 6.210 5.747 5.335 4.9684.639 4.344 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.6505.216 4.833 18% 0.847 1.566 2.174 2.690 3.127 20% 0.833 1.528 2.106 2.589 2.991 Period 6 5.795 Period 7 6.728 Period 8 7.652 Period 9 8.566 Period 10 9.471 3.498 3.812 4.078 4.303 4.494 3.326 3.605 3.837 4.031 4.192 Period 11 | 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 Period 12 11.255 10.575 | 9.954 9.3858.863 8.384 7.536 6.814 6.194 5.660 5.1974.793 Period 1312.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.3676.628 6.002 5.468 5.008 Period 15 13.865 12.849 11.938 11.11810.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 Period 2018.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.4696.623 5.929 5.353 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.4278.055 7.003 6.177 5.517 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 | 8.244 7.105 6.233 5.548 4.327 4.439 4.533 4.611 4.675 4.870 4.948 4.979 4.997 Print Done Reference Future Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 8% 1.080 1.166 1.260 1.360 1.469 10% 1.100 1.210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 1.104 2.100 2.488 Period 6 Period 7 Period 8 Period 9 Period 10 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1.340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.587 1.714 1.851 1.999 2.159 1.772 1.949 2.144 2.358 2.594 1.974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3.252 3.707 2.436 2.826 3.278 3.803 4.411 2.700 3.185 3.759 4.435 5.234 2.986 3.583 4.300 5.160 6.192 Period 11 Period 12 Period 13 Period 14 Period 15 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2.079 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 2.133 2.720 3.452 4.363 5.492 6.886 8.599 10.699 2.261 2.937 3.797 4.887 6.261 7.988 10.147 12.839 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1,469.772 Period 20 Period 25 Period 30 Period 40 1.220 1.282 1.348 1.489 1.486 1.641 1.811 2.208 1.806 2.094 2.427 3.262 2.191 2.666 3.243 4.801 2.653 3.386 4.322 7.040 Print Done Reference Present Value of $1 18% Periods 1% Period 1 0.990 Period 2 0.980 Period 3 0.971 Period 4 0.961 Period 5 0.951 Period 6 0.942 Period 7 0.933 Period 8 0.923 Period 9 0.914 Period 10 0.905 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 4% 5% 6% 8% 0.962 0.952 0.943 0.926 0.925 0.907 0.890 0.857 0.889 0.864 0.840 0.794 0.855 0.823 0.792 0.735 0.822 0.784 0.747 0.681 0.790 0.746 0.630 0.760 0.711 0.665 0.583 0.731 0.677 0.627 0.540 0.703 0.6450.592 0.500 0.676 0.614 0.558 0.463 10% 0.909 0.826 0.751 0.683 0.621 12% 14% 16% 20% 0.893 0.877 0.862 0.847 0.833 0.797 0.769 0.743 0.7180.694 0.712 0.675 0.641 0.609 0.579 0.636 0.592 0.552 0.516 0.482 0.567 0.519 0.476 0.437 0.402 0.507 0.456 0.410 0.370 0.335 0.452 0.400 0.354 0.314 0.279 0.404 0.351 0.305 0.266 0.233 0.361 0.308 0.263 0.225 0.194 0.322 0.270 0.227 0.191 0.162 0.705 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.564 0.513 0.467 0.424 0.386 Period 110.896 Period 12 0.887 Period 13 0.879 Period 14 0.870 Period 15 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0.469 0.442 0.417 0.429 0.397 0.368 0.340 0.315 0.350 0.319 0.290 0.263 0.239 0.287 0.237 0.195 0.257 0.208 0.168 0.229 0.182 0.145 0.205 0.160 0.125 0.183 0.140 0.108 0.162 0.137 0.116 0.099 0.084 0.135 0.112 0.093 0.078 0.065 Period 20 0.820 0.673 Period 25 0.780 0.610 Period 30 0.742 0.552 Period 400.672 0.453 0.554 0.456 0.478 0.375 0.412 0.308 0.307 0.208 0.377 0.295 0.231 0.142 0.312 0.233 0.174 0.097 0.215 0.146 0.099 0.046 0.149 0.092 0.057 0.022 0.104 0.073 0.051 0.059 0.038 0.024 0.033 0.0200.012 0.011 0.005 0.003 0.037 0.026 0.016 0.010 0.007 0.004 0.001 0.001 Print Done