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 withdraw $230,000 per year for the next 30 years (based on family history, you think you will live to age 70). You plan to save by making 15 equal annual installments (from age 25 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 Present Value of $1 table.) Click the icon to view Present Value of Ordinary Annuity of S1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Futuro Value of Ordinary Annuity of $1 table.) Read the requirements Requirement 1. How much money must you accumulate by retirement to make your plan work? (Hint. Find the present value of the $230,000 withdrawals.) (Round your final answer to the nearest whole dollar.) To make the plan work, you must accumulate this amount by retirement Requirement 2. How does this amount compare to the total amount you will withdraw from 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: O A. 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. 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 yearthe balance remains invested where it continues to eam 10% interest. OC. You need to have the same amount accumulated as you will withdraw because you will not earn further interest on your investment when you reach retirement y ay oyuai dididiems from age Ky investment fund that you expect will earn 10% per year. You will leave the money in this fund until it is completely depleted to view Present Value of $1 table.) to view Euture Value of $1 table (Click the icon to view Present Value of Ordinary Annuity of $1 table.) click the icon to view. Future Value of Ordinan. Annuit of $1 table nd Requirements equirements $0,000 un W 1. How much money must you accumulate by retirement to make your plan work? (Hint: Find the present value of the $230,000 withdrawals.) 2. How does this amount compare to the total amount you will withdraw from the investment during retirement? How can these numbers be so different? Ho these num e01 24 Print Done are year the to remains invested where it continues to earn 10% interest. Reference You then 40) ir are 7 Read Reqy with Tom Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0,971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 0.9800.951 0.943 0.925 0.907 0.890 0.873 0857 0.842 0.826 0.797 0.769 0.756 0.743 0.7180.694 Period 3 0.971 0.942 0.915 0.8890.864 0.840 0.816 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.507 0.456 0432 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.7600.7110.665 0.623 0.5830.547 0.513 04520.400 0.376 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.4040.351 0.327 0,305 0.268 0.233 Period 9 0.914 0.837 0.766 0.703 0.6450.5920.544 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0463 0422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 11 0.896 0.8040.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.205 0.160 0,141 0.125 0.099 0.078 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Period 16 0.853 0.728 0.623 0.534 0.458 0.394 0.3390292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 Period 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.1980.146 0.108 0.093 0.080 0.060 0.045 Period 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.1800.130 0.095 0.081 0.069 0.051 0.038 Period 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.031 Requ so di Over How Thes OB od Print Don 1 Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 e Period 6 Period 7 Period 8 Period 9 Period 10 Future Value of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 1.010 1.020 1.030 1.040 1.050 1.060 1.070 1.080 1.090 1.100 1.120 1.140 1.150 1.020 1.040 1.061 1.0821.103 1.1241.145 1.166 1.1881.210 1.254 1.300 1.323 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.260 1.295 1.331 1.405 1.4821.521 1.041 1.0821.126 1.170 1.216 1.2621.311 1.360 1.412 1.464 1.574 1.689 1.749 1.051 1.104 1.159 1.217 1.276 1.338 1.403 1.469 1.539 1.611 1.762 1.925 2.011 1.062 1.126 1.194 1.265 1.340 1.419 1.501 1.587 1.6771.772 1.974 2.195 2.313 1.072 1.149 1.2301.316 1.407 1.504 1.606 1.714 1.828 1.949 2.211 2.502 2.660 1.083 1.172 1.267 1.369 1.477 1.594 1.718 1.851 1.993 2.144 2.476 2.853 3.059 1.094 1.195 1.305 1.423 1.551 1.689 1.838 1.999 2.172 2.358 2.773 3.252 3.518 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2.367 2.594 3.106 3.707 4.046 1.116 1.243 1.384 1.539 1.710 1.898 2.105 2.332 2.580 2.853 3.479 4.226 4.652 1.127 1.268 1.426 1.601 1.796 2.012 2.252 2.518 2.813 3.138 3.896 4.818 5.350 1.138 1.294 1.469 1.665 1.886 2.133 2.410 2.720 3.066 3.452 4.363 5.492 6.153 1.149 1.319 1.513 1.732 1.980 2.261 2.579 2.937 3.342 3.798 4.887 6.261 7.076 1.161 1.346 1.558 1.801 2.079 2.397 2.759 3.172 3.642 4.177 5.474 7.138 8.137 1.173 1.373 1.605 1.873 2.183 2.540 2.952 3.426 3.970 4.595 6.130 8.1379.358 1.184 1.400 1.653 1.948 2.292 2.693 3.159 3.700 4.328 5.054 6.866 9.276 10.76 1.196 1.428 1.702 2.026 2.407 2.854 3.380 3.996 4.717 5.5607.690 10.58 12.38 1.208 1.457 1.754 2.107 2.527 3.026 3.617 4.316 5.142 6.116 8.613 12.06 14.23 Period 11 Period 12 Period 13 Period 14 Period 15 Period 16 Period 17 Period 18 Period 19 Reference 8% 9% Present Value of Ordinary Annuity of 51 Periods 1% 2% 3% 4% 5% 6% 7% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 1.970 1942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.6901.6471.626 1.6051566 1.528 Period 3 2.941 2884 2.829 2.775 2.723 2.673 2.624 2577 2.531 2.487 2402 2322 2283 2246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.3123.240 3.170 3,037 29142855 2.798 2.690 2.589 Period 5 4.853 4.713 4.580 4.452 4.329 4212 4.100 3.993 3.890 3.791 3.605 3433 3.352 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.488 4.355 4.111 3.889 3.784 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4,868 4.5644.288 4.160 4.0393.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.5355.335 4.968 4639 4.487 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.9955.759 5.328 4.9464772 4.607 4,303 4.031 Period 10 9.471 8.9838.530 8.111 7.722 7.360 7.0246.710 6.418 6.145 5.650 5216 5,019 4.833 4494 4.192 Period 11 10.368 9.7879.253 8.7808.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5234 5.029 4.656 4327 Period 12 11 255 10.575 9.95493858.863 8.384 7.943 75367.1616.814 6.194 5.660 5.421 5.197 4.793 4439 Period 13 12.134 11.348 10.635 9.986 9.3948.853 8.358 7.904 7487 7.103 6.424 5.8425,583 5.342 4.910 4533 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.2447.7867367 6.628 6.002 5.724 5.468 5.008 4611 Period 15 13.865 12.849 11.938 11.118 10.3809.712 9.108 8.559 8.061 7.606 6.811 6.1425.847 5,575 5.092 4.675 Period 16 14.718 13.578 12.561 11.652 10.838 10.106) 9.447 8.851 8.313 7.824 6.9746.2655.954 5.669 5.1624.730 Period 17 15,562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.5448.022 7.120 6.373 6.047 5.749 5.222 4.775 Period 18 16.398 14.992 13.754 12,659 11.690 10.828 10.0599.3728.756 8.2017.250 6.4676.128 5.818 5.273 4.812 Period 19 17.226 15.678 14,324 13.134 1208511.158 10.336 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4844 Print Done Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15 Future Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.010 2.020 2030 2.540 2.050 2.060 2.070 2.080 2.090 2.100 2.1202.140 2.150 3.030 3.060 3.091 3.122 3.153 3.1843.215 3.246 3.278 3.310 3.374 3.440 3.473 4.060 4.122 4.184 4.246 4.310 4.375 4.440 4.506 4.573 4.641 4.779 | 4.921 4.993 5.101 5.204 5.309 5.416 5.526 5.637 5.7515.867 5.985 6.105 6.353 6.610 6.742 6.152 6.308 6.468 6.633 6.8026.975 7.1537.336 7.523 7.716 8.115 8.536 8.754 7.214 7.4347.6627.898 8.142 8.394 8.654 8.9239.2009.487 10.09 10.73 11.07 8.286 8.583 8.8929.214 9.549 9.897 10.260 10.64 | 11.03 11.44 12.30 13.23 13.73 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 | 14.78 16.09 16.79 10.46 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.1915.94 17.55 | 19.34 | 20.30 11.57 12.17 12.81 13.49 14 21 14.97 15.78 16.65 17.56 18.53 20.65 23.04 24.35 12.68 13.41 14.19 15.03 15.92 16.87 17.8918.98 20.14 21.3824.13 27.2729.00 13.81 14.68 | 15.62 16.63 17.71 18.88 20.14 21.50 22.95 24.52 28.03 32.09 34.35 14.95 15.97 17.09 18.29 19.60 21.02 22.55 24.21 26.02 27.98 32.39 37.58 40.50 16.10 17.29 18.60 20.02 21.58 23.28 25.13 27.15 29.36 | 31.77 37.28 43.84 47.58 17.26 18.64 20.16 21.8223.66 25.67 27.89 30.32 33.00 35.95 42.75 50.98 55.72 18.43 20.01 21.76 23.70 25.84 28.21 30.84 33.75 36.97 40.54 48.88 59.12 65.08 19.61 21.41 23.41 25.65 28.13 30.91 34.00 37.45 | 41.30 45.60 55.7568.39 75.84 20.81 22.84 25.12 27.67 30.54 33.76 37.38 41.45 46.02 51.16 63.44 78.97 88.21 Period 16 Period 17 Period 18 Period 19 Print Done