Victor and Maria Hernandez Try to Catch Up on Their Investments The expenses associated with sending two children through college prevented Victor and Maria Hernandez from adding substantially to their investment program. Now that their younger son, Joseph, has completed school and is working full time. They would like to build up their investments quickly. Victor is 47 years old and wants to retire early, perhaps by age 60. In addition to the retirement program at his place of employment, Victor believes that their investment portfolio, currently valued at $127,000, will need to triple to $381,000 by his planned retirement time, in 13 years. He and Maria realize that they will have to sacrifice a lot of current spending to save and invest for retirement. What rate of return is needed on the $127,000 portfolio to reach their goal of $381,000 (assuming no additional contributions)? Use Appendix A.1 or visit the Garman/Forgue companion website. Round your answer to the nearest whole number. Round Future Value of a Single Amount in intermediate calculations to four decimal places. % Victor and Maria think they will need a total of $640,000 for a retirement financial nest egg to supplement his anticipated small pension from teaching. Therefore, they will need to create an additional sum of about $259,000 through new investments. Assuming an annual return of 7 percent, how much do the Hernandezes need to invest each year to reach their goal of $259,000? Use Appendix A.3 or visit the Garman/Forgue companion website. Round your answer to the nearest dollar. Round Future Value of a Series of Equal Amounts in intermediate calculations to four decimal places. $ If they assume a 5 percent annual return, how much do the Hernandezes need to invest each year to reach their goal of $259,000? Use Appendix A.3 or visit the Garman/Forgue companion website. Round your answer to the nearest dollar. Round Future Value of a Series of Equal Amounts in intermediate calculations to four decimal places. $
Appendix A-3 Future Value of a series of Equal Amounts (an Annuity of $1 Paid at the End of Each Period) (Used to compute the Compounded Future Value of a Stream of Income Payments) n 1 2 1% 1.0000 2.0100 2% 1.0000 2.0200 7% 1.000 2.0700 8% 1.000 2.0800 9% 1.000 2.0900 10% 1.000 2.1000 16% 1.0000 2.1600 18% 1.0000 2.1800 19% 1.0000 2.1900 3 3.0301 4.0604 5.1010 3.0604 4.1216 52040 3.21493.2464 4.4399 4.5061 5.7507 5.8666 3.2781 4.5731 5.9847 3.3100 4.6410 6.1051 3.5056 5.0665 35724 52154 7.1542 3.6061 5.2913 7.2966 5 6.8771 8.9775 11.4139 14.2401 17.5185 94420 12.1415 153270 19.0859 235213 28.7551 17% 10000 2.1700 3.5389 5.1405 7.0144 9.2068 11.7720 14.7733 18.2847 22.3931 27.1999 32.8239 39.4040 47.1027 56.1101 66.6488 21.3215 25.7329 30.8502 36.7862 3% 4% 5% 6% 10000 10000 1.000 1.000 2.0300 2.0400 2.0500 2.0600 3.0909 3.1216 3.1525 3 .1836 4.1836 4.2465 43101 4.3746 5.3091 5.41635.52565.6371 6.4684 6.6330 6.8019 6.9753 7.6625 78983 8 .1420 8.3938 889239.2142 9.5491 9.8975 10.1591 10.5828 11.0266 11.4913 114639 12.0061 12.5779 13.1808 12.8078 13.4864 14.2068 14.9716 14.1920 15.0258 159171 168699 15.6178 16.6268 17.7130 188821 17.0863 18.2919 19.5986 21.0151 18.5989 20.0236 21.5786 232760 20.1569 21.8245 23.6575 256725 21.7616 23.6975 25.8404 28.2129 23.4144 25.6454 28.1324 30.9057 25.1169 27.6712 30.5390 33.7600 26.8704 29.7781 33.0660 36.7856 28.6765 31.9692 35.7193 39.9927 30.5368 34.2480 38.5052 43.3923 41.4305 46.9958 34 4265 390826 44 5020 50 8156 364593 41.6459 47.7271 54.8645 38.5530 443117 51.1135 59.1564 40.7096 47.0842 54.6691 63.7058 42.9309 49.9676 58.4026 68.5281 45.2188 52.9663 62.3227 73.6398 47.5754 56.084966.438979.0582 75.401395.0255 120.7998 154.7620 112.7969 152.6671 2093480 290 3359 96830 12.5227 15.9020 199234 24.7089 30 4035 37.1802 45 2445 54.8409 66.2607 79.8502 43.6720 51.6595 11% 12% 13% 14% 15% 1.0000 10000 1.000 1.000 1.0000 21100 2.1200 2.1300 2.1400 2.1500 3.3421 33744 3.4069 3.4396 3.4725 4.7097 4.7793 4.8498 4.92114.9934 6.2278 63528 6.4803 6.6101 6.7424 7.9129 8.1152 8.3227 8.5355 8.7537 9.7833 10.0890 10.4047 10.7305 11.0668 11.8594 12 2997 12.7573 13.2328 13.7268 14.1640 147757 154157 16.0853 1 6.7858 16.7220 175487 18.4197 19.3373 20.3037 19.5614 206546 21.8143 23.01452 4.3493 22.7132 24.1331 25.6502 27.2707 29.0017 26.2116 28.0291 29.9847 32.0887 34.3519 30.0949 32.3926 348827 37.5811 40.5047 34.4054 37.2797 40.4175 43.8424 47.5804 39.1899 46.6717 50.9804 55.7175 44.5008 48.8837 53.7391 59.1176 65.0751 50.3959 55.7497 61.7251 68.3941 75.8364 56.9395 6 3.4397 70.7494 78.9692 88.2118 64.2028 720524 80.9468 91.0249 102.4436 72.2651 816987 92.4699 104.7684 118.8101 81.2143 9 2 5026 105.4910 120.4360 137.6316 91.1479 1046029120.2048 138.2970 159.2764 102. 1741 118.1552 136 8315 158.6586 184.1678 114.4133133 3339 155,6196 181.8708 212.7930 127.99881503339 176.8501 208.3327 245.71 20 143.0786 169 3740 2008406 238.4993 283.5688 159.8173 1906989 227.9499272.8892 327.1041 178.3972 214.5827 258.5834 312.0937 377.1697 199.02092413327 293.1992 356.7868 434.7451 581.8260 767.0914 1013.704 1342.025 1779.090 1668.771 2400018 3459.507 4994.5227217.714 349311 42.2187 508180 60.9653 72.9390 60.9250 20% 1.0000 2.2000 3.6400 5.3680 7.4416 9.9299 12.9159 16.4991 20.7989 25.9587 32.1504 39.5805 48.4966 5 9.1959 72.0351 87.4421 105.9306 128.1167 154.7400 186.6880 225.0256 271.0307 326.2368 392.4842 471.9811 567.3773 681.8527 819.2233 984.0679 71.6730 84.1407 6 6.1520 63081 7 7.2135 7.4343 8 8.2857 8.5830 9 9 .3685 9.7546 10 10.4622 10.9497 11 11.5668 12.1687 12 12.6825 13.4121 13 13.8093 14.6803 14 14.9474 15.9739 15 16.0969 172934 16 17.2579 18.6393 17 18.4304 20.0121 18 19.6147 21.4123 19 208 109 22 8406 20 22.0 190 242974 21 23.2392 25.7833 22 24.4716 27 2990 23 25.7163 288450 24 26.9735 304219 25 28.2432 32.0303 26 29.5256 33.6709 27 30.8209 353443 28 32.1 291 37.0512 29 33.4504 38.7922 30 34.7849 40.5681 40 48.8864 60.4020 50 64.4632 84.5794 78.9791 93.4056 87.0680 103.7403 7.1533 7.3359 7.5233 7.7156 8.6540 8.92 28 9.2004 9.4872 10.2598 10.6366 11.028511.4359 11.9780 12.4876 13.0210 13.5795 13.8164 14.4866 15.1929 15.9374 15.7836 16.6455 17.5603 18.5312 17.8885 18.9771 20.1407 21.3843 20.1406 21.4953 22.9534 24.5227 22.5505 24.2149 26.0192 27.9750 25.1290 27.1521 29.3609 3 1.7725 27 B881 30.3243 33.0034 35.9497 30 B402 33.7502 36.9737 40.5447 33.9990 37.450241.3013 45.5992 37.379041.4463 46.0185 51.1591 40.9955 45.7620 51.1601 57.2750 44.8652 50.4229 56.7645 64.0025 49.0057 55.4568 62.8733 71.4027 53.4361 60.8933 69.5319 79.5430 58.1767 66.7648 76.7898 88.4973 63.249073.1059 84.7009 98.3471 68.676579.9544 93.32 40 109.1818 74.4838 87.3508 102.7231 121.0999 80.6977 95.3388 112.9682 134,2099 87.3465 103.9659 124.1354 148.6309 94.4608 113.2832 136.3075 164.4940 199.6351 259.0565 337.8824442.5925 406.5289 573.7701 815.0834 1163.908 96.0217 115.2659 98.6032110 2846 115.3797 130.0329 123.4135 145.6280 138.1664 165.4180 134.8405 157.4150 183.60 14 213.9776 153.1385 180.1721 211.8013 248.8075 249.2140 292.1048 290.0883 342.7626 337.50 24 402.0323 392.5027 471.3778 456.3032 552.5120 530.3117 647.4390 2360.757 3 134.522 10435.65 15089.50 1740210 2063448 244.4868 289.4945 342 6035 405 2721 4792211 5664808 6694474 790 9479 4163.212 2 1813.09 197.8474 236.4384 282 3618 3370105 402 0424 479 4305 571.5223 681.1116 811.5228 966.7121 5529.829 3151533 1181.882 7343.856 45497.17 Appendix A-1 Future Value of a Single Amount ($1 at the End of n Periods) (Used to compute the compounded Future Value of a Known Lump Sum) 10% 1.1000 1.2100 1.3310 11% 1.1100 1.2321 1.3676 12% 1.1200 1.2544 1.4049 13% 1.1300 12769 14429 1.5181 1.6851 1.5735 1.7623 16305 18424 1.8704 2.0762 1.4641 1.6105 1.7716 1.9487 2.1436 2.3579 2.5937 2.8531 3.1384 1.9738 2.2107 24760 2.0820 2.3526 17% 1.1700 1.3689 1.6016 1.8739 2.1924 2.5652 3.0012 3.5115 4.1084 48068 5.6240 6.5801 2.3045 2.6584 2.7731 3.0040 2.5580 2.8394 3.1518 3.4985 3.1058 3.4785 3.8960 14% 15% 1.1400 1.1500 1.29961.3225 1.4815 1.5209 1.6890 1.7490 1.9254 2.0114 2.1950 2.3131 2.50 23 2.6600 2.8526 3.0590 3.2519 3.5179 3.7072 4.0456 4.2262 4.6524 4.8179 5.3503 5.4924 6.1528 6.2613 7.0757 7.1379 8.1371 8.1372 9.3576 9.2765 10.7613 10.5752 12.3755 3.3946 3.8359 4.3345 3.8833 4.3635 4.8980 3.4523 3.7975 7.6987 9.0075 4.31044.88 71 n 1% 1 1.0100 2 1.0201 3 1.0303 4 1.0406 5 1.0510 6 10615 7 1.0721 8 1.0829 9 1.0937 10 1.1046 11 1.1157 12 1.1268 131.1381 14 1.1495 15 1.1610 16 1.1726 17 1.1843 18 1.1961 19 1.2081 20 1.2202 21 1.2324 22 1.2447 23 1.2572 24 1.2697 25 1.2824 26 1.2953 27 1.3082 28 13213 29 1.3345 30 13478 40 1.4889 50 1.6446 5.5348 2% 3% 4% 10200 1.0300 1.0400 10404 1.0609 1.0816 1.0612 1.0927 1.1249 1.0824 1.1255 1.1699 1.1041 1.1593 1.2167 1.1262 1.1941 1.2653 1.1487 1.2299 1.3159 1.1717 1.2668 1.3686 1.1951 1.3048 1.4233 1.21901.34391.4802 1.2434 1.3842 1.5395 1.2682 14258 1.6010 1.2936 1.4685 1.6651 1.3195 1.5126 1.7317 1.34591.5580 1.8009 1.3728 1.60471.8730 1.4002 1.6528 1.9479 1.4282 1.70242.0258 1.4568 1.7535 2.1068 1.4859 1.8061 2.1911 1.5157 1.86032.2788 1.5460 1.9161 2.3699 1.5759 1.9736 2.4647 1.6084 2.0328 2.5633 1.6406 2.0938 2.6658 16734 2.1566 2.7725 1.7069 2.2213 2.8834 1.7410 2.2879 2.9987 1.7758 23566 3.1187 18114 2.4273 3.2434 2.2080 3.2620 4.8010 2.6916 43839 7.1067 5% 6% 7% 8% 9% 1.0500 10600 10700 10800 1.0900 1.1025 1.1236 1.1449 1.1664 1.1881 1.1576 1.1910 12250 1.2597 1.2950 1.2155 1.2625 13108 1.3605 1.4116 1.2763 13382 1.4026 1.4693 1.5386 1.3401 14185 15007 1.5869 16771 1.4071 1.5036 16058 1.7138 18280 1.4775 1.5938 1.7182 18509 1 9926 1.5513 16895 18385 1.9990 2.1719 1.6289 1.7908 19672 2.158923674 1.7103 18983 2.1049 2.3316 2.5804 1.7959 2.0122 22522 2.5182 28127 1.8856 2.1329 2.4098 2.7196 3.0658 1.9799 226092.5785 2.9372 33417 2.0789 23966 2.75903.1722 3.6425 2.1829 2.5404 2.9522 3.42593 9703 2.2920 26928 3.1588 3.7000 43276 2.4066 28543 3.3799 3.9960 47171 2.5270 3.0256 36165 43157 5.1417 2.6533 3.2071 38697 4.6610 5.6044 2.7860 339964.1406 5.0338 6.1088 2.9253 3.5035 4.4304 5.4365 6.6586 3.0715 38197 47405 5 8715 7.2579 3.2251 40489 50724 6.3412 79111 3.3864 42919 5.4274 68485 8 6231 3.5557 45494 58074 73964 93992 3.7335 48223 62139 7.9881 10.2451 3.92015.1117 66488 8.6271 11.1671 4.116154184 7.1143 9.3173 12.1722 4.32195.7435 76123 10.0627 13.2677 7.0400 10.2857 14.9745 21.7245 31.4094 11.4674 18.4202 29.4570 46.9016 743575 4.1772 4.5950 5.0545 5.5599 5.4736 6.1304 6 8660 7.6900 6.2543 7.0673 7.9861 9.0243 16% 1.1600 1 .3456 1.5609 1.8106 2.1003 2.4364 2.8262 3.2784 3.8030 4.4114 5.1173 5.9360 6.8858 7.9875 9.2655 10.7480 12.4677 14.4625 16.7765 19.4608 22.5745 26.1864 3 0.3762 35.2364 40.8742 47.4141 55.0004 63.8004 7 4.0085 85.8499 378.7212 1670.704 6.1159 6.7275 7.4002 18% 19% 20% 1.1800 1.1900 1.2000 1.3924 1.4161 1.4400 1.6430 1.6852 1.7280 1.9388 2.0053 2.0736 2.2878 2.3864 2.4883 2.6996 2.8398 2.9860 3.1855 3.3793 3.5832 3.7589 4.02 14 4.2998 4.4355 4.7854 5.1598 5.2338 5.6947 6.1917 6.1759 6.7767 7.4301 7.2876 8.06428.9161 8.5994 9 .5964 10.6993 10.1472 11.4198 12.8392 11.9737 13.5895 15.4070 14.1290 16.1715 18.4884 16.6722 19.2441 22.1861 19.6733 22.9005 26,6233 23.2144 27.2516 31.9480 27.3930 32.4294 38.3376 32.3238 38.5910 46.0051 38.1421 4 5.9233 55.2061 45.0076 54.6487 66.2474 5 3.1090 65.03 20 79.4968 62.6686 77.3881 95.3962 7 39490 92.0918 114.4755 87.2598 109.5893 137.3706 102.9666 130.4112 164.8447 121.5005 155.1893 197.8136 143.3706 184.6753 237.3763 750.37831051.668 1469.772 3927.357 5 988.914 9100.438 8.6128 9.6463 10.8038 10.1974 11.5231 13.0211 12.0557 13.7435 15.6676 4.7845 5.3109 5.8951 6.5436 7.2633 8.0623 8.9492 9.9336 11.0263 12.2392 13.5855 15.0799 16.7386 18.5799 20.6237 22.8923 65.0009 184.5648 14.2318 16.3665 18.8215 8.1403 8.9543 9.8497 10.8347 11.9182 13.1100 14.4210 15.8631 17.4494 45.2593 117.3909 10.5387 12.3303 14.4265 16.8790 19.7484 23.1056 27.0336 31.6293 37.0062 43.2973 50.6578 59.2697 69.3455 81.1342 9 4.9271 111.0647 533.8687 2566.215 12.1003 14.7138 17.86 10 21.6447 13.5523 16.6266 20.3616 24.8915 15.1786 18.7881 23.2122 28.6252 17.0001 21.2305 26.46 19 32.9190 19.0401 23.9905 30.1666 37.8568 21.3249 27.1093 34.3899 43.5353 23.883930633539.2045 50.0656 26.7499 34.6158 44.6931 57.5755 2 9.9599 39.1159 50.9502 66.2118 9 3.0510 132.7816 188.8835 267.8635 289.0022 450.7359700.2330 1083.657
