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 $210,000 per year for the next 40 years (based on family history, you think you will live to age 80). You plan to save by making 20 equal annual installments (from age 20 to age 40) into a fairly risky investment fund that you expect will earn 14% 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 Present 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 $1 table.) (Click the icon to view Future 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 $210,000 withdrawals.) (Round your final answer to the nearest whole dollar.) To make the plan work, you must accumulate $ 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 the same amount 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 less accumulated than what you will withdraw because you only withdraw a portion of the investment every yearthe balance remains invested where it continues to earn 14% interest. O C. 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 earn 14% interest. OD. None of the above Present Value of $1 Future Value of $1 Periods 1 2 Periods 1 2 3 4 5 1% 0.990 0.980 0.971 0.961 0.951 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.864 0.823 0.784 6% 0.943 0.890 0.840 0.792 0.747 7% 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 12% 0.893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 15% 0.870 0.756 0.658 0.572 0.497 16% 0.862 0.743 0.641 0.552 0.476 18% 0.847 0.718 0.609 0.516 0.437 20% 0.833 0.694 0.579 0.482 0.402 3 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 5% 1.050 1.103 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 7% 1.070 1.145 1.225 1.311 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 1.090 1.188 1.295 1.412 1.539 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 15% 1.150 1.323 1.521 1.749 2.011 4 5 6 7 8 9 10 0.942 0.933 0.923 0.914 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.665 0.627 0.592 0.558 0.666 0.623 0.582 0.544 0.508 0.630 0.583 0.540 0.500 0.463 0.596 0.547 0.502 0.460 0.422 0.564 0.513 0.467 0.424 0.386 0.507 0.452 0.404 0.361 0.322 0.456 0.400 0.351 0.308 0.270 0.432 0.376 0.327 0.284 0.247 0.410 0.354 0.305 0.263 0.227 0.370 0.314 0.266 0.225 0.191 0.335 0.279 0.233 0.194 0.162 6 7 8 9 10 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1.340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.587 1.714 1.851 1.999 2.159 1.677 1.828 1.993 2.172 2.367 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 2.313 2.660 3.059 3.518 4.046 3.479 11 12 13 14 15 0.896 0.887 0.879 0.870 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.429 0.397 0.368 0.340 0.315 0.388 0.356 0.326 0.299 0.275 0.350 0.319 0.290 0.263 0.239 0.287 0.257 0.229 0.205 0.183 0.237 0.208 0.182 0.160 0.140 0.215 0.187 0.163 0.141 0.123 0.195 0.168 0.145 0.125 0.108 0.162 0.137 0.116 0.099 0.084 0.135 0.112 0.093 0.078 0.065 11 12 13 14 15 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2.079 1.898 2.012 2.133 2.261 2.397 2.105 2.252 2.410 2.579 2.759 2.332 2.518 2.720 2.937 3.172 2.580 2.813 3.066 3.342 3.642 2.853 3.138 3.452 3.798 4.177 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 4.652 5.350 6.153 7.076 8.137 0.527 0.475 0.497 0.444 0.469 0.415 0.442 0.388 0.417 0.362 0.394 0.339 0.371 0.317 0.350 0.296 0.331 0.277 0.312 0.258 16 17 18 19 20 0.853 0.844 0.836 0.828 0.820 0.728 0.714 0.700 0.686 0.673 0.623 0.605 0.587 0.570 0.554 0.534 0.513 0.494 0.475 0.456 0.458 0.436 0.416 0.396 0.377 0.292 0.270 0.250 0.232 0.215 0.252 0.231 0.212 0.194 0.178 0.218 0.198 0.180 0.164 0.149 0.163 0.146 0.130 0.116 0.104 0.107 0.093 0.081 0.070 0.061 0.093 0.080 0.069 0.060 0.051 0.071 0.060 0.051 0.043 0.037 0.054 0.045 0.038 0.031 0.026 16 17 18 19 20 1.173 1.184 1.196 1.208 1.220 1.373 1.400 1.428 1.457 1.486 1.605 1.653 1.702 1.754 1.806 1.873 1.948 2.026 2.107 2.191 2.183 2.292 2.407 2.527 2.653 2.540 2.693 2.854 3.026 3.207 2.952 3.159 3.380 3.617 3.870 3.426 3.700 3.996 4.316 4.661 3.970 4.328 4.717 5.142 5.604 4.595 5.054 5.560 6.116 6.727 6.130 6.866 7.690 8.613 9.646 8.137 9.276 10.58 12.06 13.74 9.358 10.76 12.38 14.23 16.37 0.123 0.108 0.095 0.083 0.073 0.064 0.056 0.049 0.043 0.038 21 22 23 24 25 0.811 0.803 0.795 0.788 0.780 0.660 0.647 0.634 0.622 0.610 0.538 0.522 0.507 0.492 0.478 0.439 0.422 0.406 0.390 0.375 0.359 0.342 0.326 0.310 0.295 0.294 0.278 0.262 0.247 0.233 0.242 0.226 0.211 0.197 0.184 0.199 0.184 0.170 0.158 0.146 0.164 0.150 0.138 0.126 0.116 0.135 0.123 0.112 0.102 0.092 0.093 0.083 0.074 0.066 0.059 0.053 0.046 0.040 0.035 0.030 0.044 0.038 0.033 0.028 0.024 0.031 0.026 0.022 0.019 0.016 0.022 0.018 0.015 0.013 0.010 21 22 23 24 25 1.232 1.245 1.257 1.270 1.282 1.516 1.546 1.577 1.608 1.641 1.860 1.916 1.974 2.033 2.094 2.279 2.370 2.465 2.563 2.666 2.786 2.925 3.072 3.225 3.386 3.400 3.604 3.820 4.049 4.292 4.141 4.430 4.741 5.072 5.427 5.034 5.437 5.871 6.341 6.848 6.109 6.659 7.258 7.911 8.623 7.400 8.140 8.954 9.850 10.83 10.80 12.10 13.55 15.18 17.00 15.67 17.86 20.36 23.21 26.46 18.82 21.64 24.89 28.63 32.92 26 27 28 29 30 0.772 0.764 0.757 0.749 0.742 0.598 0.586 0.574 0.563 0.552 0.464 0.450 0.437 0.424 0.412 0.361 0.347 0.333 0.321 0.308 0.281 0.268 0.255 0.243 0.231 0.220 0.207 0.196 0.185 0.174 0.172 0.161 0.150 0.141 0.131 0.135 0.125 0.116 0.107 0.099 0.106 0.098 0.090 0.082 0.075 0.084 0.076 0.069 0.063 0.057 0.053 0.047 0.042 0.037 0.033 0.033 0.029 0.026 0.022 0.020 0.005 0.026 0.023 0.020 0.017 0.015 0.021 0.018 0.016 0.014 0.012 0.003 0.014 0.011 0.010 0.008 0.007 0.009 0.007 0.006 0.005 0.004 26 27 28 29 30 1.295 1.308 1.321 1.335 1.348 1.673 1.707 1.741 1.776 1.811 2.157 2.221 2.288 2.357 2.427 2.772 2.883 2.999 3.119 3.243 3.556 3.733 3.920 4.116 4.322 4.549 4.822 5.112 5.418 5.743 5.807 6.214 6.649 7.114 7.612 7.396 7.988 8.627 9.317 10.06 9.399 10.25 11.17 12.17 13.27 11.92 13.11 14.42 15.86 17.45 19.04 21.32 23.88 26.75 29.96 30.17 34.39 39.20 44.69 50.95 37.86 43.54 50.07 57.58 66.21 40 0.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.011 0.004 0.001 0.001 40 1.489 2.208 3.262 4.801 7.040 10.29 14.97 21.72 31.41 45.26 93.05 188.9 267.9 50 0.608 0.372 0.228 0.141 0.087 0.054 0.034 0.021 0.013 0.009 0.003 0.001 0.001 0.001 50 1.645 2.692 4.384 7.107 11.47 18.42 29.46 46.90 74.36 117.4 289.0 700.2 1,084 15% Periods 1 2 3 4 5 0.870 1.626 2283 2.855 3.352 16% 0.862 1.605 2.246 2.798 3.274 18% 0.847 1.566 2.174 2.690 3.127 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 Periods 1 2 3 4 5 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 Future Value of Ordinary Annuity of $1 4% 5% 6% 7% 8% 9% 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2.050 2.060 2.070 2.080 2.090 3.122 3.153 3.184 3.215 3.246 3.278 4.246 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 15% 1.000 2.150 3.473 4.993 6.742 3.170 6 6 7 8 9 10 3.784 4.160 4.487 4.772 5.019 3.685 4.039 4.344 4.607 4.833 3.498 3.812 4.078 4.303 4.494 8 9 10 6.152 7.214 8.286 9.369 10.46 6.308 7.434 8.583 9.755 10.95 6.468 7.662 8.892 10.16 11.46 6.633 7.898 9.214 10.58 12.01 6.802 8.142 9.549 11.03 12.58 6.975 8.394 9.897 11.49 13.18 7.153 8.654 10.260 11.98 13.82 7.336 8.923 10.64 12.49 14.49 7.523 9.200 11.03 13.02 15.19 7.716 9.487 11.44 13.58 15.94 8.115 10.09 12.30 14.78 17.55 8.536 10.73 13.23 16.09 19.34 8.754 11.07 13.73 16.79 20.30 24.35 29.00 34.35 40.50 47.58 11 12 13 14 15 5.234 5.421 5.583 5.724 5.847 5.029 5.197 5.342 5.468 5.575 4.656 4.793 4.910 5.008 5.092 4.327 4.439 4.533 4.611 4.675 11 12 13 14 15 11.57 12.68 13.81 14.95 16.10 12.17 13.41 14.68 15.97 17.29 12.81 14.19 15.62 17.09 18.60 13.49 15.03 16.63 18.29 20.02 14.21 15.92 17.71 19.60 21.58 14.97 16.87 18.88 21.02 23.28 15.78 17.89 20.14 22.55 25.13 16.65 18.98 21.50 24.21 27.15 17.56 20.14 22.95 26.02 29.36 18.53 21.38 24.52 27.98 31.77 20.65 24.13 28.03 32.39 37.28 23.04 27.27 32.09 37.58 43.84 Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.037 2.914 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 13.865 12.849 11.938 11.11810.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 17.226 15.678 14.32413.134 | 12.085 11.158 10.336 10.336 9.604 8.950 8.365 7.366 6.550 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.6497.562 6.687 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 12.042 11.061 10.2019.4428.772 7.645 6.743 20.456 18.292 | 16.444 14.857 13.489 | 12.303 11.272 10.371 9.580 8.883 7.718 6.792 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 6.835 22.023 19.523 | 17.413 15.622 17.413 15.622 14.094 12.783 11.654 11.654 10.675 9.823 9.077 7.843 6.873 22.795 20.121 17.877 15.983 14.375 13.003 13.003 11.826 11.826 10.810 9.929 9.161 7.896 6.906 23.560 20.707 18.327 16.330 14.643 13.211 11.987 11.987 | 10.935 10.935 10.027 9.237 7.943 6.935 24.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 6.961 25.066 21.844 19.188 | 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.022 6.983 25.808 22.39619.600 17.292 15.372 13.765 12.409 | 11.258 12.409 11.258 10.274 9.427 8.055 7.003 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 39.196 31.424 25.730 21.48218.256 15.762 13.801 12.233 12.233 10.962 9.915 8.304 7.133 16 17 18 19 20 5.954 6.047 6.128 6.198 6.259 5.669 5.749 5.818 5.877 5.929 5.162 5.222 5.273 5.316 5.353 4.730 4.775 4.812 4.844 4.870 16 17 18 19 20 17.26 18.43 19.61 20.81 22.02 18.64 20.01 21.41 22.84 24.30 20.16 21.76 23.41 25.12 26.87 21.82 23.70 25.65 27.67 29.78 23.66 25.84 28.13 30.54 33.07 25.67 28.21 30.91 33.76 36.79 27.89 30.84 34.00 37.38 41.00 30.32 33.75 37.45 41.45 45.76 33.00 36.97 41.30 46.02 51.16 35.95 40.54 45.60 51.16 57.28 42.75 48.88 55.75 63.44 72.05 50.98 59.12 68.39 78.97 91.02 55.72 65.08 75.84 88.21 1024 21 22 23 24 25 6.312 6.359 6.399 6.434 6.464 5.973 6.011 6.044 6.073 6.097 5.384 5.410 5.432 5.451 5.467 4.891 4.909 4.925 4.937 4.948 21 22 23 24 25 23.24 24.47 25.72 26.97 28.24 25.78 27.30 28.85 30.42 32.03 28.68 30.54 32.45 34.43 36.46 31.97 34.25 36.62 39.08 41.65 35.72 38.51 41.43 44.50 47.73 39.99 43.39 47.00 50.82 54.86 44.87 49.01 53.44 58.18 63.25 50.42 55.46 60.89 66.76 73.11 56.76 62.87 69.53 76.79 84.70 64.00 71.40 79.54 88.50 98.35 81.70 92.50 104.6 118.2 133.3 104.8 120.4 138.3 158.7 181.9 118.8 137.6 159.3 1842 212.8 6.118 33.67 26 27 28 29 30 6.491 6.514 6.534 6.551 6.566 6.136 6.152 6.166 6.177 5.480 5.492 5.502 5.510 5.517 4.956 4.964 4.970 4.975 4.979 26 27 28 29 30 29.53 30.82 32.13 33.45 34.78 35.34 37.05 38.79 40.57 38.55 40.71 42.93 45.22 47.58 44.31 47.08 49.97 52.97 56.08 51.11 54.67 58.40 62.32 66.44 59.16 63.71 68.53 73.64 79.06 68.68 74.48 80.70 87.35 94.46 79.95 87.35 95.34 104.0 113.3 93.32 102.7 113.0 124.1 136.3 109.2 121.1 134.2 148.6 164.5 150.3 169.4 190.7 214.6 241.3 208.3 238.5 272.9 312.1 356.8 245.7 283.6 327.1 377.2 434.7 40 6.642 6.233 5.548 4.997 40 48.89 60.40 75.40 95.03 120.8 154.8 199.6 259.1 337.9 442.6 767.1 1,342 1,164 2,400 4,995 1,779 7,218 50 6.661 6.246 5.554 4.999 50 64.46 84.58 112.8 152.7 209.3 290.3 406.5 573.8 815.1