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 $210,000 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 earn 10% per year. You will leave the money in this fund until it is completely depleted when you are 70 years old. (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) More info 1. How much money must you accumulate by retirement? (Hint: Find the present value of the $210,000 withdrawals.) 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? 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.) 4. How does the total out-of-pocket savings compare to the investment's value at the end of the 10-year savings period and the withdrawals you will make during retirement? Print Done ifferent? ning for d on famil vestment Reference - r for the next to age 40) int 70 years old. Present Value of Annuity of $1 e icon to Periods 1% 2% 3% Period 1 0.990 e icon to Period 2 1.970 r plan wo e icon to Period 3 Period 4 Period 5 4.853 2.941 3.902 4% 0.980 0.971 0.962 1.942 1.913 1.886 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 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 5% 6% 8% 10% 12% 14% 16% 18% 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 1.859 1.833 1.783 1.736 1.690 1.647 1.566 1.528 20% 1.605 2.246 2.174 2.106 2.798 2.690 2.589 3.127 2.991 money e present value is this amo burse of y age 40 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 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 91 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 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 3.498 3.326 4.494 4.192 4.656 4.327 4.793 4.439 5.342 4.910 4.533 5.468 5.008 4.611 6.142 5.575 5.092 4.675 nt? 6.623 5.929 5.353 4.870 6.873 6.097 5.467 4.948 7.003 7.105 6.233 6.177 5.517 4.979 5.548 4.997 bers are d need to h sted wher need to h Print Done balance remai h retirement. Time Remaining: 02:24:43 Nav X S ning for a on famil vestment e icon to Reference r for to a Present Value of $1 e 70 Periods Period 1 1% e icon to 2% 3% 4% 0.990 0.980 0.971 0.962 Period 2 0.980 0.961 0.943 0.925 5% 6% 8% 10% 12% 14% 16% 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.907 0.890 0.857 0.826 0.797 0.769 0.743 18% 20% 0.847 0.833 0.718 0.694 r plan wo Period 3 0.971 0.942 0.915 0.889 e icon to 0.961 0.951 0.924 0.888 money Period 10 0.905 0.820 0.744 present Period 11 0.896 0.804 0.722 Period 12 0.887 0.788 0.701 Period 4 Period 5 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 Period 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 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 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 0.195 0.162 0.135 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 value is Period 13 0.879 0.773 0.681 Period 14 0.870 0.758 0.661 0.577 this amo Period 15 0.861 0.743 0.642 0.555 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 nt? Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 urse of Period 25 0.780 0.610 0.478 Period 30 0.742 0.552 0.412 age 40 Period 40 0.672 0.453 0.307 0.149 0.104 0.073 0.051 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.308 0.231 0.174 0.099 0.057 0.033 0.208 0.142 0.097 0.046 0.022 0.011 0.037 0.026 0.024 0.016 0.010 0.020 0.012 0.007 0.004 0.005 0.003 0.001 0.001 ers are d heed to h ted wher heed to h Print Done bala retir Ex ning on Reference vest Future Value of $1 e ic Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% e ic Period 1 1.010 1.020 1.030 1.040 1.050 1.060 1.080 1.100 1.120 1.140 1.160 1.180 1.200 Period 2 1.020 1.040 1.061 1.082 1.103 1.124 1.166 1.210 1.254 1.300 1.346 1.392 1.440 ur pla Period 3 1.030 1.061 1.093 1.125 1.158 1.191 1,260 1.331 1.405 1.482 1.561 1.643 1.728 Period 4 1.041 1.082 1.126 e ic Period 5 1.051 1.104 1.159 1.217 1.170 1.216 1.276 1.262 1.360 1.464 1.574 1.689 1.811 1.939 2.074 1.338 1.469 1.611 1.762 1.925 2.100 2.288 2.488 Period 6 1.062 1.126 1.194 1.265 Period 7 1.072 1.149 1.230 1.316 1.340 1.419 1.407 1.504 1.587 1.772 1.974 2.195 2.436 2.700 2.986 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 h mo 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 e pre 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 1.127 1.268 1.426 2.518 3.138 t val Period 13 1.138 1.294 2.720 Period 14 1.149 s this Period 15 1.161 Period 20 1.220 1.486 1.806 ours Period 25 1.282 1.641 2.094 Period 301 1.348 1.811 2.427 by ag Period 40 1,489 2.208 3.262 3.243 4.801 1.601 1.796 2.012 1.469 1.665 1.886 2.133 1.319 1.513 1.732 1,980 2.261 2.937 1.346 1.558 1.801 3.172 2.079 2.397 2.191 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 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 3.896 4.818 5.936 7.288 8.916 3.452 4.363 5.492 6.886 8.599 10.699 3.797 4.887 6.261 7.988 10.147 12.839 4.177 5.474 7.138 9.266 11.974 15.407 38.338 bers need sted need Print Done 1. How much money must you accumulate by retirement? (Hint: Find the present value of the $210,000 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 invested where it continues to earn 10% interest. OB. 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. 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 invested where it continues to earn 10% interest. OB. 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. OC. 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 where it continues to earn 10% interest. 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 dollar.) 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 investment's value at the end of the 10-year savings period and the withdrawals you will make during retirement? (Use the investment rounded to the nearest whole number that you calculated above, then round your final answer to the nearest whole dollar.) 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 investment's value afthe end of the 10-year savings period and the withdrawals you will make during retirement? (Use 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 This is far investment than the investment's worth at the end of ten years and remarkably than the amount of money you will eventually withdraw from the