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 $240,000 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 10% 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 S1 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 $240,000 withdrawals.) (Round your final answer to the nearest whole dollar) To make the plan work, you must accumulates 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 withdrawings 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 OB. 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 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 Present Value of $1 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 0925 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 0842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 0.670 0.596 6 7 8 9 10 0.942 0.933 0.923 0.914 0.905 0.888 0871 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 0.705 0.665 0.627 0.592 0.558 0.666 0.623 0.582 0.544 0.508 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 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 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0570 0.554 0.650 0.625 0.601 0.577 0.565 0534 0.513 0.494 0.475 0.456 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0218 0.198 0.180 0.164 0.149 0.135 0.123 0.112 0.102 0.092 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 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0270 0.250 0232 0215 0.199 0.184 0.170 0.158 0.146 0.135 0.125 0.116 0.107 0.099 0.458 0.436 0.416 0.396 0.377 0.359 0.342 0.326 0.310 0.295 0.252 0.231 0.212 0.194 0.178 12% 14% 15% 16% 18% 20% 0.893 0.877 0.870 0.862 0.847 0.833 0.797 0.769 0.756 0.743 0.718 0.694 0.712 0.675 0.658 0.641 0.609 0.579 0.636 0.592 0.572 0.552 0.516 0.482 0.567 0.519 0.497 0.476 0437 0.402 0.507 0.456 0.432 0.410 0.370 0.335 0.452 0.400 0.376 0.354 0.314 0.279 0.404 0.351 0.327 0.305 0.266 0.233 0.361 0.308 0.284 0.263 0.225 0.194 0.322 0.270 0.247 0.227 0.191 0.162 0287 0.237 0.215 0.195 0.162 0.135 0.257 0.208 0.187 0.168 0.137 0.112 0.229 0.182 0.163 0.145 0.116 0.093 0 205 0.160 0.141 0.125 0.099 0.078 0.183 0.140 0.123 0.108 0.084 0.065 0.163 0.123 0.107 0.093 0.071 0.054 0.146 0.108 0.093 0.080 0.060 0.045 0.130 0.096 0.081 0.069 0.051 0.038 0.116 0.083 0.070 0.060 0.043 0.031 0.104 0.073 0.061 0051 0.037 0.026 0.093 0.064 0.053 0.044 0.022 0.083 0.056 0.046 0.038 0.026 0.018 0.074 0.049 0.040 0.033 0.022 0.015 0.066 0.043 0.035 0.028 0.019 0.013 0.059 0.038 0.030 0.024 0.016 0.010 0.053 0.033 0.026 0.021 0.014 0.009 0.047 0.029 0.023 0.018 0.011 0.007 0.042 0026 0.020 0.016 0.010 0.006 0.037 0.022 0.017 0.014 0.008 0.005 0.033 0.020 0.015 0.012 0.007 0.004 0.011 0.005 0.004 0.003 0.001 0.001 0.003 0.001 0.001 0.001 0.031 21 22 23 24 25 0.811 0.803 0.795 0.788 0.780 0.538 0.522 0.507 0.492 0.478 0.294 0.278 0.262 0.247 0.233 0.242 0.226 0.211 0.197 0.184 0.184 0.150 0.138 0.126 0.116 0660 0.647 0.634 0.622 0.610 0.598 0.586 0.574 0.563 0.552 26 27 28 29 30 0.220 0.772 0.764 0.757 0.749 0.742 0.439 0.422 0.406 0.390 0.375 0.361 0.347 0.333 0.321 0.308 0.208 0.464 0.450 0.437 0.424 0412 0.281 0.268 0.255 0.243 0.231 0.196 0.185 0.174 0.097 0.054 0.172 0.1 0.150 0.141 0.131 0.106 0.098 0.090 0.082 0.075 0.032 0.084 0.076 0.069 0.063 0.057 0.307 0.022 40 50 0.672 0.608 0.453 0.372 0.142 0.087 0.067 0.034 0.046 0.021 0.228 0.141 0.013 0.009 Print Done Future Value of $1 Periods 7% 2 3 4 5 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 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 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 1.419 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 2211 2.476 2.773 3.106 2. 195 2.502 2.853 3.252 3.707 2313 2 660 3.059 3.518 4,046 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 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 1.898 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 3.479 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 he 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 2952 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 yo ar 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 2786 2.925 3.072 3.225 3.386 3.400 3.604 3.820 4049 4.292 4.141 4.430 4.741 5.072 5.427 5.034 5.437 5.871 6.341 6.848 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 6.109 6.659 7.258 7911 8.623 9.399 10.25 11.17 12.17 1327 26 27 28 29 30 1.295 1.308 1.321 1.335 1.348 1.489 1.673 1.707 1.741 1.776 1.811 2157 2.221 2.288 2.357 2.427 2.772 2.883 2.999 3.119 3.243 4.801 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 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 3.262 21.72 31.41 45.26 188.9 267.9 2208 2.692 7.040 11.47 10.29 18.42 14.97 29.46 93.05 289.0 50 1.645 4.384 7.107 46.90 74.36 117.4 700.2 1,084 Print Done 2% 1 12% 0.893 1.690 2402 3037 3.605 14% 0.877 1.647 2.322 2.914 3.433 15% 0.870 1.626 2.283 2855 3.352 3.784 4160 4.487 4.772 5019 16% 0.862 1.605 2246 2.798 3.274 18% 0 847 1.566 2.174 2690 3.127 20% 0.833 1.528 2.106 2.589 2.991 4.111 4.564 4.968 5.328 6.650 3.889 4 288 4639 4.946 5.216 3.685 4.039 4.344 4.607 4.833 3.498 3.812 4.078 4.303 4.494 3.326 3.605 3.837 4.031 4.192 Present Value of Ordinary Annuity of $1 Periods 1% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 2 1.970 1.942 1.913 1.886 1.859 1833 1.808 1.783 1.759 1.736 3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2577 2.531 2487 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 5 4.853 4713 4.580 4.452 4.329 4212 4.100 3.993 3.890 3.791 6 5.795 5601 5.417 5.242 5.076 4.917 4767 4.623 4.486 4.355 7 6.728 6.472 6.230 6.002 5.786 5.582 5389 5.206 5.033 4.868 8 7.652 7.325 7.020 6.733 6.463 6210 5.971 5.747 5.535 5.335 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6 247 5.995 5.759 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 12 11 255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 12.13411.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 14 13.004 12.106 11 296 10.563 9.899 9.295 8745 8 244 7.786 7.367 15 13.865 12.849 11.938 11.11810.380 9.712 9 108 8.559 8,061 7.606 16 14.718 13.578 12 561 11652 10.838 10.106 9.447 8.851 8.313 7.824 17 15.562 14 292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 18 16.398 14.992 13.754 12.659 11 690 10.828 10.059 9.372 8.756 8.201 19 17 226 15.678 14 324 13.13412085 11.158 10.336 9.604 8.950 8.365 20 18.046 16.351 14.877 13.590 12.462 11.470 10 594 9.818 9.129 8.514 21 18.857 17 011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8649 22 19.660 17.658 15.93714451 13.163 12.042 11.061 10 201 9.442 8.772 23 20.456 18 292 16 444 14.857 13.489 12.303 | 11 272 10.371 9.580 8.883 24 21 243 18 914 16.936 15 247 13.79912550 11.469 10.529 9.707 8.985 25 22.023 19.523 17.413 15 622 14.094 12.783 11.654 10.675 9.823 9.077 26 22.796 20.121 17.877 15.983 14.375 13.003 11 826 10.810 9.929 9.161 27 23.560 20.707 18.327 16 330 14.643 13.211 11 987 10.935 10.027 9.237 28 24.316 21 28118.764 16,663 14.898 13.406 12.137 11.051 10.116 9.307 29 25.066 21.844 19.188 16.984 15.141 13.591 12 278 11 158 10.198 9.370 30 25 808 22.396 19 600 17.292 15.372 13.765 12 409 11.258 10 274 9427 40 32 835 27.355 23.115 19.793 17 159 15.046 13 332 11.925 10.757 9.779 50 39.196 31 424 25.730 21.48218 256 15.762 13 801 12 233 10.962 9.915 5.938 6.194 6.424 6.628 6.811 5.453 5.660 5.842 6.002 6.142 5.029 5.197 5.342 5.468 5.575 5234 5.42 5.583 6.724 5.847 5.954 6.047 6.128 6.198 6.259 6.974 7.120 7.250 7.366 7.469 6.265 6.373 6.467 6.550 6.623 5.669 5.749 5.818 5.877 5.929 4.656 4.327 4.793 4.439 4.910 4.533 5.008 4.611 5.092 4.675 5.162 4.730 5.222 4.775 5.273 4.812 6.316 4.844 5.353 4.870 5.384 4.891 5.410 4909 5.432 4.925 5.451 4.937 5.467 4.948 7.562 7.645 7.718 7.784 7.843 6.687 6.743 6.792 6.835 6.873 6.312 6.359 6.399 6.434 6.484 5.973 6.011 6.044 6.073 6.097 6.118 6.136 6.152 6.166 6.177 7.896 7.943 7.984 8.022 8.055 8.244 8.304 6.906 6.935 6.961 6.983 7.003 6.491 6.514 6.534 6.551 6.566 6.642 5.480 5.492 5.502 5.510 5.517 4956 4.964 4.970 4.975 4.979 6.233 5.548 4 997 7.106 7.133 6.661 6.246 5 554 4.999 Print Done Periods 14% 1 2 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 3 5 6 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 2040 2.050 2.060 2.070 2.080 2.090 3.122 3.153 3.184 3.215 3.246 3.278 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 6.633 6.802 6.975 7.153 7.336 7.523 7.898 8.142 8.394 8.654 8.923 9.200 9.214 9.549 9.897 10.260 10.64 11.03 10.58 11.03 11.49 11.98 12.49 13.02 12.01 12.58 13.18 13.82 14.49 15.19 10% 1.000 2.100 3,310 4641 6.105 12% 1.000 2.120 3.374 4.779 6.353 4 1.000 2.140 3.440 4.921 6.610 4.246 15% 1.000 2.150 3.473 4.993 6.742 8.754 11.07 13.73 16.79 20.30 7 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 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 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 23.04 27.27 32.09 37.58 43.84 24.35 29.00 34.35 40.50 47.58 20.65 24.13 28.03 32.39 37.28 42.75 48.88 55.75 63.44 72.05 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 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 5728 50.98 59.12 68.39 78.97 91.02 25.67 28.21 30.91 33.76 36.79 39.99 43.39 47.00 50.82 54.86 55.72 65.08 75.84 88 21 102.4 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 38.5 41.43 44.50 47.73 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 1182 133.3 104.8 120.4 138.3 158.7 181.9 118.8 137.6 159.3 1842 212.8 44.87 49.01 53.44 58.18 63.25 68.68 74.48 80.70 87.35 94.46 26 27 28 29 30 29.53 30.82 32.13 33.45 34.78 33.67 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 79.95 87.35 95.34 1040 113.3 93.32 102.7 113.0 124.1 136.3 109.2 121.1 1342 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 3772 434.7 40 48.89 60.40 75.40 95.03 120.8 154.8 199.6 259.1 337.9 4426 767.1 50 64.46 84.58 112.8 152.7 1,342 4,995 1,779 7,218 209.3 290.3 406.5 573.8 815.1 1,164 2,400 Requirement 2. How does this amount compa different? Over the course of your retirement you will be hogy arent because: $240.000 the future value e far less accumulated d where it continues to e the present value Tou neeu w nave the same amount accu retirement