Explore BrainMass
Share

Compare periodic payments to a lump sum

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Carolyn Ellis is setting up an annuity for her retirement. She can set aside $2,000 at the end of each year for the next 20 years and it will earn 6% annual interest. What lump sum will she need to set aside today at 6% annual interest to have the same retirement fund available 20 years from now? How much more will Carolyn need to invest in periodic payments than she will if she makes a lump sum payment if she intends to accumulate the same retirement balance?

© BrainMass Inc. brainmass.com March 21, 2019, 7:18 pm ad1c9bdddf
https://brainmass.com/business/annuity/compare-periodic-payments-lump-sum-287021

Attachments

Solution Summary

The solution explains how to determine the lump sum amount to be saved today so as given a the same future value as of annual savings.

$2.19