O You are planning for a very early retirement. You would like to retire at age 40 and have enough money saved to be able to draw $230,000 per year for the next 30 years (based on family history, you think you'll live to age 70). You plan to save for retirement by making 10 equal annual installments (from age 30 to age 40) into a fairly risky investment fund that you expect will eam 10% per year. You will leave the money in this fund until it is completely depleted when you are 70 years old. Click the loon to view the present value annuity table) (Click the icon to view the present value table) (Click the loon to view the future value annuity table) (Click the icon to view the future value table) To make your plan work answer the following questions (Click the icon to view the questions.) early retirement. irement by maki ou are 70 years he present value Reference Present Value of Annuity of $1 Periods 1% the present value Period 1 0.990 swer the followin the questions.) Period 2 1.970 Period 3 2.941 Period 4 3.902 Period 5 4.853 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 20% you accumulate t e to find out how 2.246 2.174 2106 2.798 2.690 2.589 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 4.039 3.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.303 4.031 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 4.833 4.494 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 4.327 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 compare to the tot retirement you w only need to hav ent because: Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 6.623 5.929 5.353 4.870 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 4.948 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 7.003 6.177 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 7.105 6.233 5.517 4.979 5.548 4.997 far less accumulat far more accumul Print Done pint(s) possible (based on family hill ear. You will leave t sted where it continue invested where it co- by early retirement etirement by maki you are 70 years the present value Reference Periods 1% 2% 3% the present value Period 1 0.990 0.980 answer the followin the questions.) Period 2 0.980 Period 3 0.971 Perlod 4 0.961 Period 5 0.951 Period 6 0.942 0.888 0.837 0.790 Period 7 0.933 0.871 0.813 0.760 0.711 Period 8 0.923 0.853 0.789 0.731 0.677 0.837 0.766 t you accumulate I ue to find out how 0.744 compare to the tot r retirement you w u only need to hav rent because: Present Value of $1 20% 4% 5% 6% 8% 10% 12% 14% 16% 18% 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.336 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.196 0.162 0.136 0.625 0.557 0.497 0.397 0.319 0.257 0.206 0.168 0.137 0.112 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 Period 9 0.914 Period 10 0.905 0.820 Period 11 0.896 0.804 0.722 Period 12 0.887 0.788 0.701 Period 13 0.879 0.773 0.681 Period 14 0.870 0.758 0.661 Period 15 0.861 0.743 0.642 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 0.004 Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.006 0.003 0.001 0.001 e far less accumulat e far more accumula Print Done (based on family history car. You will leave the m sted where it continues to ea s invested where it continues early retirer tirement by you are 70 y Reference Future Value of $1 the present Periods 1% 2% 3% 4% 5% the present Period 1 1.010 1.020 1.030 1.040 Period 2 1.020 1.040 1.061 1.082 nswer the foll Period 3 1.030 1.061 1.093 1.125 1.158 1.191 6% 1.050 1.060 1.080 1.103 1.124 1.166 1.260 1.210 8% 10% 12% 1.100 1.120 1.140 1.254 1.300 14% 16% 18% 20% 1.160 1.180 1.200 1.346 1.392 1.440 Period 4 1.041 the question 1.082 1.126 1.170 1.216 1.262 Period 5 1.051 1.104 1.159 1.217 1.276 1.338 1.469 1.331 1.360 1.464 1.574 1.689 1.811 1.611 1.762 1.925 2.100 1.405 1.482 1.561 1.643 1.728 1.939 2.074 2.288 2.488 Period 6 1.062 1.126 1.194 1.265 1.340 1.419 1.587 1.772 1.974 2.196 2.436 2.700 2.986 Period 7 1.072 1.149 1.230 1.316 1.407 1.504 1.714 1.949 2.211 2.502 2.826 3.185 3.583 Period 8 1.083 1.172 1.267 1.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 3.759 4.300 Period 9 1.094 1.195 1.305 1.423 1.551 1.689 1.999 2.358 2.773 3.252 3.803 4.435 5.160 t you accumu Period 10 1.105 1.219 1.344 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 5.234 6.192 ue to find out t Period 11 1.116 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 4.226 5.117 6,176 7.430 Period 12 Period 13 1.127 1.268 1.426 1.601 1.796 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 1.138 1.294 1.469 1.665 1.886 2.133 2.720 Period 14 1.149 1.319 1.513 1.732 1.980 2.261 2.937 3.452 4.363 5.492 6.886 3.797 8.599 10.699 compare to th Period 15 1.161 1.346 1.558 1.801 2.079 2.397 3.172 4.887 6.261 7.988 10.147 4.177 5474 7.138 12.839 9.266 11.974 15.407 Period 20 1.220 1.486 1.806 2.191 2.653 r retirement y Period 25 Period 30 u only need to Period 40 1.282 1.641 2.094 2.666 1.348 1.811 2.427 3.243 1.489 2.208 3.262 4.801 3.207 4.661 6.727 9.646 13.743 19.461 27.393 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 96.396 4.322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 7.040 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1.469.772 38.338 brent because: e far less accu ve far more acc Print Done - X possible ed on family his You will leave th where it continues ested where it cont O O O 1. How much money must you accumulate by retirement? (Hint: Find the present value of the $230,000 withdrawals.) Calculate the present value to find out how much money must be accumulated by retirement. (Round your answer to the nearest whole dollar.) The present value is 2. How does this amount compare to the total amount you will draw out of the investment during retirement? How can these numbers be so different? Over the course of your retirement you will be withdrawing However, by age 40 you only need to have invested These numbers are different because: OA. You need to have far less accumulated than what you will withdraw because you only withdraw a portion of the investment every year-the balance remains investe OB. You need to have far more accumulated than what you will withdraw because you will withdraw a large portion of the investment every year-the balance remains ins OC. You need to have the same accumulated as you will withdraw because you will not eam further interest on your investment when you reach retirement OD. None of the above. 3. How much must you pay into the investment each year for the first ten years? (Hint. Your answer from Requirement 1 becomes the future value of this annuity) (Round your answer to the nearest whole doam For the first ten years, the amount you must pay into the investment each year is 4. How does the total out-of-pocket savings compare to the investments value at the end of the 10-year savings period and the withdrawals you will make during retirement? (Use the investment rounded to the whole number that you calculated above, then round your final answer to the nearest whole dollar) The total out-of-pocket savings amounts to This for than the investment's worth at the end of ten years and remarkably than the amount of money you will eventually withdrew from the investment Time Remaining: 02:15:46