Reference Present Value of Annuity of $1 Periods l 1% | 2% 3% | 4% | 5% | 696 | 896 | 10% | 1296 | 14% | 1696 | 1896 | 2096 10.990 0.980 0.971 0.9620.9520.9430.926 0.909 0.893 0.877 0.862 0.847 0.833 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.6901.6471.6051.566 1.528 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.2462.174 2.106 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.1113.8893.6853.4983.326 7 6.7286.472 6.230 6.002 5.786 5.582 5.206 4.868 4.5644.2884.0393.8123.605 8 7.652 7.325 7.020 6.733 6.463 6.210 5.7475.335 4.9684.6394.3444.0783.837 9 8.566 8.162 7.786 7.435 7.1086.802 6.2475.759 5.3284.9464.6074.3034.031 10 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.1455.6505.2164.8334.494 4.192 11 10.368 9.787 9.253 8.760 8.306 | 7.887 |7.139 6.4955.9385.4535.0294.656 4.327 12 11.255 10.575 9.9549.385 8.863 8.3847.536 6.8146.1945.6605.1974.793 4.439 13 12.134 11.348 10.635 9.986 9.394 8.853 7.9047.1036.4245.8425.3424.910 4.533 14 13.004 12.106 11.296 10.563 9.8999.2958.2447.3676.628 6.002 5.468 5.008 4.611 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 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.5147.4696.623 5.929 5.353 4.870 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.4674.948 30 25.808| 22.396| 19.600| 17.292| 15.372| 13.765| 11.258| 9.427 | 8.055 | 7.003 | . 177 | 5.517 | 4.979 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.7798.2447.105 6.233 5.548 4.997 Print Done Reference Present Value of $1 periods l 896 | 10% | 12% | 14% | 16% | 18% | 20% | 0.990 | 0.980 | 0.971 | 0.962 | 0.952 | 0.943 | 0.926 | 0.909 | 0.893 | 0.877 | 0.82 | 0.847 | 0.833 2 0.980 0.961 0.943 0.925 0.9070.8900.8570.826 0.797 0.769 0.743 0.718 0.694 3 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 4 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 | 0.636 0.592 0.552 0.516 0.482 5 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 | 0.567 0.519 0.4760.4370.402 1% 496 5% 696 2 2 0 2 3 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 | 0.507 0.456 0.410 0.370 0.335 7 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 | 0.452 0.400 0.3540.314 0.279 0.923 |0.853 0.7890.7310.6770.6270.540 0.467 0.404 0.351 0.305 0.266 0.233 0.914 0.837 0.766 | 0.703 | 0.645 | 0.592 | 0.500 | 0.424 | 0.361 | 0.308 | 0.23 | 0.225 | 0.194 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 | 0.322 0.270 0.227 0.191 0.162 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.2570.2080.1680.1370.112 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.2290.1820.1450.1160.093 14 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.1600.1250.0990.078 15 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.1830.1400.108 0.0840.065 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.1040.0730.051 0.0370.026 25 0.780 0.610 0.478 0.3750.2950.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 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 40 0.672 0.453 0.3070.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 Print Done 49 .6 8 11122 23456 78111 89 23 46 74 3 595 8 519 1. 724 26 1 5% 160 36 su su 100 400 006 210 003 011-996 006 998 250 wi STA 350 1-1 1 1 1 2 22334 55679 19 40 85 4% 140 300 400 ses $25 195 500 ssa 250 220 ELE 201 198 ras ASL 350 2%-120 250 400 STA 202 spa ars 996 360 997 apa 000 980 osi 8 327 6 2842 44567 23 33445 9 17 29 93 2 5 114 9 741 928 72 1 2 5791 9 9 2222 345 10 6 5 2 2 00011 223 91 02 0 12345 67891 12345 20 25 30 40 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 $220,000 per year for the next 40 years (based on family history, you think you'll live to age 80). You plan to save for retirement by making 20 equal annual installments (from age 20 to age 40) into a fairly risky investment fund that you expect will earn 10% per year. You will leave the money in this fund until it is completely depleted when you are 80 years old. (Click the icon to view the present value annuity table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) (Click the icon to view the present value table.) To make your plan work answer the following questions (Click the icon to view the questions.) 1. How much money must you accumulate by retirement? (Hint: Find the present value of the $220,000 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 S 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 S However, by age 40 you only need to have invested These numbers are different because: o A. You need to have the same accumulated as you will withdraw because you will not earn further interest on your investment when you reach retirement. O B. 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 invested C. 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 invested where it O D. None of the above. 3. How much must you pay into the investment each year for the first twenty years? (Hint Your answer from Requirement 1 becomes the future value of this annuity.) (Round your where it continues to earn 10% interest. continues to earn 10% interest. answer to the nearest whole dollar.) You must pay $ into the investment each year for the first twenty years. 3. How much must you pay into the investment each year for the first twenty years? (Hint. Your answer from Requirement 1 becomes the future value of this annuity.) (Round your answer to the nearest whole dollar.) You must pay $ 4. How does the total out-of-pocket savings compare to the investment's value at the end of the twenty-year savings period and the withdrawals you will make during retirement? (Use into the investment each year for the first twenty years the investment rounded to the nearest whole number that you calculated above, then round your final answer to the nearest whole dollar.) The total out-of-pocket savings amounts to S than the investment's worth at the end of twenty years and remarkably than the amount of money you will eventually withdraw from the investment