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Sarah Wiggum would like to make a single investment and have ​$1.7 million at the time of her retirement in 40 years. She has found a mutual fund that will earn 6 percent annually. How much will Sarah have to invest​ today? If Sarah invests that amount and could earn a 13 percent annual​ return, how soon could she​ retire, assuming she is still going to retire when she has ​$1.7 ​million?  To have ​$1.7 million at​ retirement, the amount Sarah must invest today is ​$_________​(Round to the nearest​ cent.) see attachment for  PVIF table

Sarah Wiggum would like to make a single investment and have ​$1.7 million at the time of her retirement in 40 years. She has found a mutual fund that will earn 6 percent annually. How much will Sarah have to invest​ today? If Sarah invests that amount and could earn a 13 percent annual​ return, how soon could she​ retire, assuming she is still going to retire when she has ​$1.7 ​million?  To have ​$1.7 million at​ retirement, the amount Sarah must invest today is ​$_________​(Round to the nearest​ cent.) see attachment for  PVIF table

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Sarah Wiggum would like to make a single investment and have ​$1.7 million at the time of her retirement in 40 years. She has found a mutual fund that will earn 6 percent annually. How much will Sarah have to invest​ today? If Sarah invests that amount and could earn a 13 percent annual​ return, how soon could she​ retire, assuming she is still going to retire when she has ​$1.7 ​million? 

To have ​$1.7 million at​ retirement, the amount Sarah must invest today is ​$_________​(Round to the nearest​ cent.)

see attachment for  PVIF table

 
Data table n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30 35 40 50 1% 5% 12% 13% 14% 15% 17% 2% 0.980 0.971 0.962 0.943 0.935 0.926 0.917 0.901 0.862 0.961 0.943 0.925 0.952 0.907 0.890 0.873 0.864 0.840 0.816 0.857 0.842 0.909 0.826 0.812 0.751 0.731 0.712 0.942 0.915 0.889 0.794 0.772 0.924 0.888 0.855 0.863 0.837 0.792 0.763 0.735 0.713 0.681 0.708 0.650 0.683 0.621 0.893 0.885 0.877 0.870 0.855 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.693 0.675 0.658 0.659 0.636 0.613 0.592 0.572 0.593 0.567 0.543 0.519 0.497 0.535 0.507 0.480 0.456 0.432 0.482 0.452 0.425 0.400 0.434 0.404 0.376 0.391 0.361 0.333 0.790 0.746 0.823 0.822 0.784 0.747 0.705 0.666 0.630 0.596 0.665 0.623 0.583 0.547 0.513 0.564 0.813 0.760 0.711 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.676 0.614 0.558 0.508 0.463 0.422 0.650 0.585 0.527 0.475 0.429 0.388 0.701 0.625 0.557 0.497 0.444 0.397 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.467 0.424 0.386 0.351 0.308 0.352 0.322 0.295 0.270 0.744 0.804 0.722 0.896 0.887 0.788 0.350 0.317 0.287 0.261 0.237 0.231 0.356 0.319 0.286 0.257 0208 0.879 0.326 0.290 0.258 0.229 0.204 0.182 0.870 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.758 0.861 0.743 0.239 0.209 0.183 0.160 0.140 0.163 0.141 0.123 0.125 0.108 0.853 0.728 0.844 0.836 0.700 0.587 0.828 0.686 0.570 0.146 0.130 0.111 0.095 0.820 0.673 0.554 0.811 0.660 0.538 0.661 0.577 0.505 0.442 0.388 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0.077 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.406 0.326 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.492 0.390 0.126 0.102 0.116 0.092 0.075 0.057 0.094 0.068 0.049 0.036 0.097 0.067 0.046 0.032 0.022 0.054 0.034 0.021 0.013 0.009 0.803 0.647 0.522 0.795 0.262 0.634 0.507 0.788 0.622 0.780 0.610 0.310 0.247 0.197 0.158 0.295 0.233 0.184 0.146 0.082 0.066 0.053 0.074 0.059 0.047 0.044 0.033 0.026 0.174 0.131 0.099 0.742 0.552 0.706 0.500 0.355 0.130 0.026 0.019 0.014 0.672 0.453 0.015 0.011 0.008 0.608 0.372 0.005 0.003 0.002 0.990 0.980 0.971 0.961 0.951 0.942 0.906 0.888 0.933 0.871 0.923 0.853 0.914 0.837 0.905 0.820 3% 25 0.478 0.375 0.412 0.308 0.231 0.253 0.181 0.208 0.307 0.228 0.141 6% 0.142 0.087 7% 8% Present Value of $1 (PVIF) 10% 11% 9% 16% 0.064 0.056 0.049 0.043 0.038 0.020 0.010 0.005 0.001 18% 19% 0.847 0.840 0.706 0.641 0.624 0.609 0.593 0.552 0.534 0.516 0.499 0.476 0.456 0.437 0.419 0.410 0.390 0.370 0.352 0.354 0.333 0.314 0.296 0.305 0.284 0.263 0.247 0.227 0.215 0.376 0.327 0.285 0.266 0.249 0.209 0.243 0.225 0.176 0.208 0.191 0.162 0.195 0.178 0.148 0.187 0.168 0.137 0.124 0.163 0.145 0.116 0.104 0.141 0.125 0.123 0.108 0.107 0.093 0.093 0.080 0.081 0.069 0.083 0.070 0.060 0.051 0.073 0.061 0.051 0.043 0.004 0.001 0.152 0.130 0.111 0.099 0.095 0.084 0.074 0.081 0.069 0.059 0.051 0.044 0.037 0.043 0.037 0.031 0.031 0.026 0.053 0.044 0.037 0.046 0.038 0.032 0.026 0.040 0.035 0.028 0.030 0.024 0.015 0.012 0.008 0.071 0.062 0.060 0.052 0.088 0.078 0.065 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.022 0.033 0.027 0.022 0.018 0.023 0.019 0.015 0.013 0.020 0.016 0.009 0.007 0.005 0.006 0.004 0.003 0.002 0.003 0.002 0.001 0.000 0.000 0.001 0.001 0.000 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.054 0.045 0.038 0.031 0.026 0.022 0.018 0.015 0.013 0.010 0.004 0.002 0.001 0.000
Transcribed Image Text:Data table n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30 35 40 50 1% 5% 12% 13% 14% 15% 17% 2% 0.980 0.971 0.962 0.943 0.935 0.926 0.917 0.901 0.862 0.961 0.943 0.925 0.952 0.907 0.890 0.873 0.864 0.840 0.816 0.857 0.842 0.909 0.826 0.812 0.751 0.731 0.712 0.942 0.915 0.889 0.794 0.772 0.924 0.888 0.855 0.863 0.837 0.792 0.763 0.735 0.713 0.681 0.708 0.650 0.683 0.621 0.893 0.885 0.877 0.870 0.855 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.693 0.675 0.658 0.659 0.636 0.613 0.592 0.572 0.593 0.567 0.543 0.519 0.497 0.535 0.507 0.480 0.456 0.432 0.482 0.452 0.425 0.400 0.434 0.404 0.376 0.391 0.361 0.333 0.790 0.746 0.823 0.822 0.784 0.747 0.705 0.666 0.630 0.596 0.665 0.623 0.583 0.547 0.513 0.564 0.813 0.760 0.711 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.676 0.614 0.558 0.508 0.463 0.422 0.650 0.585 0.527 0.475 0.429 0.388 0.701 0.625 0.557 0.497 0.444 0.397 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.467 0.424 0.386 0.351 0.308 0.352 0.322 0.295 0.270 0.744 0.804 0.722 0.896 0.887 0.788 0.350 0.317 0.287 0.261 0.237 0.231 0.356 0.319 0.286 0.257 0208 0.879 0.326 0.290 0.258 0.229 0.204 0.182 0.870 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.758 0.861 0.743 0.239 0.209 0.183 0.160 0.140 0.163 0.141 0.123 0.125 0.108 0.853 0.728 0.844 0.836 0.700 0.587 0.828 0.686 0.570 0.146 0.130 0.111 0.095 0.820 0.673 0.554 0.811 0.660 0.538 0.661 0.577 0.505 0.442 0.388 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0.077 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.406 0.326 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.492 0.390 0.126 0.102 0.116 0.092 0.075 0.057 0.094 0.068 0.049 0.036 0.097 0.067 0.046 0.032 0.022 0.054 0.034 0.021 0.013 0.009 0.803 0.647 0.522 0.795 0.262 0.634 0.507 0.788 0.622 0.780 0.610 0.310 0.247 0.197 0.158 0.295 0.233 0.184 0.146 0.082 0.066 0.053 0.074 0.059 0.047 0.044 0.033 0.026 0.174 0.131 0.099 0.742 0.552 0.706 0.500 0.355 0.130 0.026 0.019 0.014 0.672 0.453 0.015 0.011 0.008 0.608 0.372 0.005 0.003 0.002 0.990 0.980 0.971 0.961 0.951 0.942 0.906 0.888 0.933 0.871 0.923 0.853 0.914 0.837 0.905 0.820 3% 25 0.478 0.375 0.412 0.308 0.231 0.253 0.181 0.208 0.307 0.228 0.141 6% 0.142 0.087 7% 8% Present Value of $1 (PVIF) 10% 11% 9% 16% 0.064 0.056 0.049 0.043 0.038 0.020 0.010 0.005 0.001 18% 19% 0.847 0.840 0.706 0.641 0.624 0.609 0.593 0.552 0.534 0.516 0.499 0.476 0.456 0.437 0.419 0.410 0.390 0.370 0.352 0.354 0.333 0.314 0.296 0.305 0.284 0.263 0.247 0.227 0.215 0.376 0.327 0.285 0.266 0.249 0.209 0.243 0.225 0.176 0.208 0.191 0.162 0.195 0.178 0.148 0.187 0.168 0.137 0.124 0.163 0.145 0.116 0.104 0.141 0.125 0.123 0.108 0.107 0.093 0.093 0.080 0.081 0.069 0.083 0.070 0.060 0.051 0.073 0.061 0.051 0.043 0.004 0.001 0.152 0.130 0.111 0.099 0.095 0.084 0.074 0.081 0.069 0.059 0.051 0.044 0.037 0.043 0.037 0.031 0.031 0.026 0.053 0.044 0.037 0.046 0.038 0.032 0.026 0.040 0.035 0.028 0.030 0.024 0.015 0.012 0.008 0.071 0.062 0.060 0.052 0.088 0.078 0.065 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.022 0.033 0.027 0.022 0.018 0.023 0.019 0.015 0.013 0.020 0.016 0.009 0.007 0.005 0.006 0.004 0.003 0.002 0.003 0.002 0.001 0.000 0.000 0.001 0.001 0.000 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.054 0.045 0.038 0.031 0.026 0.022 0.018 0.015 0.013 0.010 0.004 0.002 0.001 0.000
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