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Amount to be deposited today

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Bill Shaffer wishes to have $200,000 in a retirement fund 20 years from now. He can crate the retirement fund by making a single lump sum deposit today. If he can earn 10 percent on his investments, ow much must Bill deposit today to create the retirement fund? If he can earn only 8 percent on his investments? Compare and discuss the results of your calculations.

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Solution Summary

The solution explains how to determine the amount to be deposited today to get the desired amount on retirement

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We have to calculate the PV given the FV. We use the compound interest formula
PV = FV/(1+rate)^n
FV = 200,000
n = time period = 20 years
Case 1 - ...

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