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 12% 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 future value annuity table.) Click the icon to view the present value 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.) Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 Period 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.106 Period 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 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 3.953 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 5.6605.197 4.793 4.439 Period 1312.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 5.342 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 10.3809.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 Period 20 18.046 16.35 14.877 13.590 12.462 11.470 9.818 8.514 7.469 6.623 5.9295.353 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 5.517 4.979 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 4.997 4.910 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 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 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 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1.219 1.265 1.316 1.369 1.423 1.480 1.419 1.504 1.594 1.689 1.791 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 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 Period 6 Period 7 Period 8 Period 9 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15 Period 20 Period 25 Period 30 Period 40 2.986 3.583 4.300 5.160 6.192 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.539 1.601 1.665 1.732 1.801 1.898 2.012 2.133 2.261 2.397 2.332 2.518 2.720 2.937 3.172 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 5.117 5.936 6.886 7.988 9.266 7.430 8.916 10.699 12.839 15.407 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 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 4.292 6.848 10.83517.000 26.462 40.874 62.669 95.396 5.743 10.06317.449 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 Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 Period 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 Period 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 Period 5 0.951 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 0.4040.3510.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.5920.500 0.424 0.361 0.308 0.263 0.225 0.194 Period 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 Period 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 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 Period 130.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 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 0.0200.012 0.007 0.004 Period 400.672 0.453 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 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 b 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; O A. 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 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 where it continues to earn 12% interest. OC. 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 12% interest. OD. None of the above 30d 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.) The total out-of-pocket savings amounts to This is far than the investment's worth at the end of ten years and remarkably eventually withdraw from the investment. than the amount of money you will For the firs mount you 4. How doe withdrawal round your -pocket sa uring retire he nearest less The total o more ngs amoun This is far than the investment's eventually withdraw from the investmen r the first ten years? (Hint: Your answer from Requirement 1 becomes the fest whole dollar.) vestment each year is investment's value at the e stment rounded to the near savings period and the that you calculated above, the higher lower Of ten years and remarkably than the amount of money you will