Stacy Monroe wants to create a fund today that will enable her to withdraw $35,000 per year for 6 years, with the first withdrawal to take place 4 years from today. Click here to view factor tables If the fund earns 15% interest, how much must Stacy invest today? (Round factor values to 5 decimal places, e. g. 1.25124 and final answers to 0 decimal places, e. g. 458,581.)

Question

Frankie Jarvis

Business

2 May, 12:41

Stacy Monroe wants to create a fund today that will enable her to withdraw $35,000 per year for 6 years, with the first withdrawal to take place 4 years from today. Click here to view factor tables If the fund earns 15% interest, how much must Stacy invest today? (Round factor values to 5 decimal places, e. g. 1.25124 and final answers to 0 decimal places, e. g. 458,581.)

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Answers (1)

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Ashton Morrow · Answer 1

She must invest $75732.63

Explanation:

Well firstly we look at the problem in 4 years time and start calculating the present value in four years.

using a financial calculator

n = 6, I = 15%, PMT = cash withdrawals = $35000, Fv = 0 pv = 132456.89

that we take that Present value in four years make it future value in current year

Fv = 132456.89, with same data and compute new present value = 75732.63