Explore BrainMass

Explore BrainMass

    Present Value problems

    Not what you're looking for? Search our solutions OR ask your own Custom question.

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

    Please show work and the calculation on the FVAIF:

    40 yr old establishes a retirement account that is expected to earn 7% annually. Contributions will be $2,000 annually at the beginning of each yr. Initially, the saver expects to start drawing on the account at age 60.
    a) How much will be in the account when the saver is age 60?
    B) If this investor found a riskier investment that offered 10%, how much in additional funds would be earned?
    C) The investor selects the 10% investment and retires at the age of 60. How much can be drawn from the account at the beginning of each yr if life expectancy is 85 and the funds continue to earn 10%.

    © BrainMass Inc. brainmass.com March 4, 2021, 7:53 pm ad1c9bdddf

    Solution Preview

    In the absence of future value tables, I am using Excel with the formula shown. Let me know if you need any help understanding the formulas:
    Answer ...

    Solution Summary

    The solution provides excellent answer to the problem below.