Question

Exercise 6-8 Alan Weatherspoon, a super salesman contemplating retirement on his fifty-forth birthday, decides to create a fund on an basis that will enable him to withdraw $19,700 per year on June 30, beginning in 2021 and continuing through 2024. To develop this fund, Alan intends to make equal contributions on June 30 of each of the years 2017-2020 Click here to view factor tables How much must the balance of the fund equal on June 30, 2020, in order for Alan to satisfy his objective? (Round factor values to decimal places, eg. 1.25124 and final answer to decimal place 58) Balance of the fund equal on June 30, 2020 Dick here to view torbies What are each of Alan contributions to the fund? (Round factor values to decimal Alan's contributions to the hand Click you would like to show Work for this questions Open Show Work

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Answer 1

Solution 6-8:

Required fund balance on June 30, 2020 = Present value of annual withdrawl = $19,700 * Cumulative PV Factor at 9% for 4 periods

= $19,700 * 3.23972 = $63,822

Required contribution in order to accumulate $63,822 = $63,822 / Cumulative FV factor at 9% for 4 periods

= $63,822 / 4.57313

= $13,956