Good day, I need assistance with question 2. A formula Image is attached aswell. QUESTION 2You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you toreceive $120,000 at the end of each year for the 25 years between retirement and death(health studies have indicated that most people die 25 years after retirement). You knowthat you will be able to earn 3% per year during the 25-year retirement period.$120,000 per year for 25 yearsTODAYRETIREMENT20 years laterEXPECTED DEATH25 years latera) How large of a lump-sum will you need to have in your retirement fund atretirement to ensure you can receive/access $120,000 retirement annuity for the25 years of your retirement?b) What single lump-sum amount should you open your retirement account withtoday to ensure the lump-sum amount you calculated, in part a, is in yourretirement fund at retirement? Assume you earn 2% per year during the 20 yearspreceding retirement. SELECTED TIME VALUE OF MONEY, STOCK & BOND VALUATION (Not Exhaustive)FV = PV x (1 + r)nFuture Value of Single LumpsumFV = PV ×|1+FV = CF ×xFV = (PV)x(en)FV = CF xPVPV ==PV =PV =FV(1+r)"Vo1+PV = CFVBo=FVnrVmCFeCF = FV÷[(1+r)"rnFV,mrmxn(1+r)-1]II)x[₁.IXnCF1PV =v - (²) × | | - | - | |× (1 + r)X(1+r)"CF = (PV ×r) ÷mxnxr)+[1+J1(²=1}x (1 + r)X1+r)Vr[{{1 + x)² − 1]}r1(1+r)"1-1(1+r)"CF₁ CF₂(1+r)²¹ (1+r)²++CF₁n(1+r)"Int={ [ - ]} + {x 11(1+r)"rBo = [1 x PV Annuity]+[MxPV]Par Value (M)(1+r)"Future Value of Single Lumpsum when interestapplied more than once but NOT continuouslyFuture Value of Single Lumpsum when interestapplied continuouslyFuture Value of Ordinary AnnuityFuture Value of Annuity DuePresent Value of Single Lumpsum whenannual interest is applied.Present Value of Single Lumpsum wheninterest is applied more than annuallybut not continuouslyPresent Value of Single Lumpsum wheninterest is applied continuouslyPresent Value of Ordinary AnnuityPresent Value of an Annuity DuePresent Value of a PerpetuityAnnual Payment required toobtain a stipulated value in thefutureAnnual Instalment on a loan;Annual payment when lump-sumpaid/received todayValue/Price of a Financial AssetPrice/Value of Bond with AnnualInterest Payments(PLEASE CONTINUE TO THE NEXT PAGE)

Present value is an estimate of the present value of future cash values that may be received at a…

QUESTION 2 You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $120,000 at the end of each year for the 25 years between retirement and death (health studies have indicated that most people die 25 years after retirement). You know that you will be able to earn 3% per year during the 25-year retirement period. $120,000 per year for 25 years TODAY RETIREMENT 20 years later EXPECTED DEATH 25 years later a) How large of a lump-sum will you need to have in your retirement fund at retirement to ensure you can receive/access $120,000 retirement annuity for the 25 years of your retirement? b) What single lump-sum amount should you open your retirement account with today to ensure the lump-sum amount you calculated, in part a, is in your retirement fund at retirement? Assume you earn 2% per year during the 20 years preceding retirement.

QUESTION 2 You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $120,000 at the end of each year for the 25 years between retirement and death (health studies have indicated that most people die 25 years after retirement). You know that you will be able to earn 3% per year during the 25-year retirement period. $120,000 per year for 25 years TODAY RETIREMENT 20 years later EXPECTED DEATH 25 years later a) How large of a lump-sum will you need to have in your retirement fund at retirement to ensure you can receive/access $120,000 retirement annuity for the 25 years of your retirement? b) What single lump-sum amount should you open your retirement account with today to ensure the lump-sum amount you calculated, in part a, is in your retirement fund at retirement? Assume you earn 2% per year during the 20 years preceding retirement.

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter2: Using Financial Statements And Budgets

Section: Chapter Questions

Problem 6FPE

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