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Your goal is to be able to withdraw $5,400 for each of the next nine years beginning one year from today. The return on the investment is expected to be 11%. The amount that needs to be invested today is closest to: (FV of $1, PV of $1, FV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.)

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ahmedgodtrust

Answer:

Annuity per period (A) = $5,400

Interest rate (r) = 11% = 0.11

Number of years (n) = 9 years

PV = A(1 -(1 + r)-n)

              r

PV = $5,400(1 - (1+0.11)-9)

                        0.11

PV = $5,400(1 - (1.11)-9)

                        0.11

PV = $5400 x 5.5370

PV = $29,899.80

The amount that needs to be invested today is $29,899.80.

Explanation:

In this case, we need to calculate the present value of an ordinary annuity by using the above formula.