Peter and Blair recently reviewed their future retirement income and expense projections. They hope to retire...
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Peter and Blair recently reviewed their future retirement income and expense projections. They hope to retire in 25 years and anticipate they will need funding for an additional 14 years. They determined that they would have a retirement income of $47,000.00 in today's dollars but that they would actually need $66,956.00 in retirement income (in today's dollars) to meet all of their objectives. a. What is their annual shortfall at retirement assuming inflation of 3 percent per year? Click on the table icon to view the FVIF table: b. At the time that they retire, how much additional amount must they have accumulated to fund their retirement needs, assuming 3 percent inflation and a rate of return of 7 percent? Click on the table icon to view the PVIFA table:. c. Calculate the additional amount that Peter and Blair must save each year for the next 25 years if they wish to completely fund their income shortfall. Click on the table icon to view the FVIFA table: n 24 25 26 27 28 29 30 31 32 33 34 35 2.00% 1.6084 1.6406 1.6734 1.7069 1.7410 1.7758 1.8114 1.8476 1.8845 1.9222 1.9607 1.9999 Compound Sum of $1 (FVIF) 4.00% 2.5633 2.6658 3.00% 2.0328 2.0938 2.1566 2.2213 2.2879 2.3566 2.4273 2.5001 2.5751 2.6523 2.7319 2.8139 2.7725 2.8834 2.9987 3.1187 3.2434 3.3731 3.5081 3.6484 3.7943 3.9461 5.00% 3.2251 3.3864 3.5557 3.7335 3.9201 4.1161 4.3219 4.5380 4.7649 5.0032 5.2533 5.5160 n 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2.00% 11.3484 12.1062 12.8493 13.5777 14.2919 14.9920 15.6785 16.3514 17.0112 17.6580 18.2922 18.9139 19.5235 20.1210 20.7069 3.00% 10.6350 11.2961 11.9379 12.5611 13.1661 13.7535 14.3238 14.8775 15.4150 15.9369 16.4436 16.9355 17.4131 17.8768 18.3270 4.00% 9.9856 10.5631 11.1184 11.6523 12.1657 12.6593 13.1339 13.5903 14.0292 14.4511 14.8568 15.2470 15.6221 15.9828 16.3296 Present Value of an Annuity (PVIFA) 5.00% 6.00% 9.3936 8.8527 9.8986 9.2950 10.3797 9.7122 10.8378 10.1059 11.2741 10.4773 11.6896 10.8276 12.0853 11.1581 12.4622 11.4699 12.8212 11.7641 13.1630 12.0416 13.4886 13.7986 14.0939 14.3752 14.6430 12.3034 12.5504 12.7834 13.0032 13.2105 7.00% 8.3577 8.7455 9.1079 9.4466 9.7632 10.0591 10.3356 10.5940 10.8355 11.0612 11.2722 11.4693 11.6536 11.8258 11.9867 8.00% 7.9038 8.2442 8.5595 8.8514 9.1216 9.3719 9.6036 9.8181 10.0168 10.2007 10.3711 10.5288 10.6748 10.8100 10.9352 9.00% 7.4869 7.7862 8.0607 8.3126 8.5436 8.7556 8.9501 9.1285 9.2922 9.4424 9.5802 9.7066 9.8226 9.9290 10.0266 10.00% 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 8.6487 8.7715 8.8832 8.9847 9.0770 9.1609 9.2372 n 24 25 26 27 28 29 30 31 32 33 34 35 36 5.00% 44.5020 47.7271 51.1135 54.6691 58.4026 62.3227 66.4388 70.7608 75.2988 80.0638 85.0670 90.3203 95.8363 6.00% 50.8156 54.8645 59.1564 63.7058 68.5281 73.6398 79.0582 84.8017 90.8898 97.3432 104.1838 111.4348 119.1209 7.00% 58.1767 63.2490 68.6765 74.4838 80.6977 87.3465 94.4608 102.0730 110.2182 118.9334 128.2588 138.2369 148.9135 Future Value of an Annuity (FVIFA) 8.00% 9.00% 66.7648 76.7898 73.1059 84.7009 79.9544 87.3508 95.3388 103.9659 124.1354 113.2832 136.3075 123.3459 149.5752 134.2135 164.0370 145.9506 179.8003 158.6267 196.9823 172.3168 215.7108 187.1021 10.00% 11.00% 12.00% 88.4973 102.1742 118.1552 98.3471 114.4133 133.3339 93.3240 109.1818 127.9988 150.3339 102.7231 121.0999 143.0786 169.3740 112.9682 134.2099 159.8173 190.6989 148.6309 178.3972 214.5828 164.4940 199.0209 241.3327 181.9434 221.9132 271.2926 201.1378 247.3236 304.8477 222.2515 275.5292 342.4294 245.4767 306.8374 384.5210 271.0244 341.5896 431.6635 236.1247 299.1268 380.1644 484.4631 13.00% 136.8315 155.6196 176.8501 200.8406 227.9499 258.5834 293.1992 332.3151 376.5161 426.4632 482.9034 546.6808 618.7493 Peter and Blair recently reviewed their future retirement income and expense projections. They hope to retire in 25 years and anticipate they will need funding for an additional 14 years. They determined that they would have a retirement income of $47,000.00 in today's dollars but that they would actually need $66,956.00 in retirement income (in today's dollars) to meet all of their objectives. a. What is their annual shortfall at retirement assuming inflation of 3 percent per year? Click on the table icon to view the FVIF table: b. At the time that they retire, how much additional amount must they have accumulated to fund their retirement needs, assuming 3 percent inflation and a rate of return of 7 percent? Click on the table icon to view the PVIFA table:. c. Calculate the additional amount that Peter and Blair must save each year for the next 25 years if they wish to completely fund their income shortfall. Click on the table icon to view the FVIFA table: n 24 25 26 27 28 29 30 31 32 33 34 35 2.00% 1.6084 1.6406 1.6734 1.7069 1.7410 1.7758 1.8114 1.8476 1.8845 1.9222 1.9607 1.9999 Compound Sum of $1 (FVIF) 4.00% 2.5633 2.6658 3.00% 2.0328 2.0938 2.1566 2.2213 2.2879 2.3566 2.4273 2.5001 2.5751 2.6523 2.7319 2.8139 2.7725 2.8834 2.9987 3.1187 3.2434 3.3731 3.5081 3.6484 3.7943 3.9461 5.00% 3.2251 3.3864 3.5557 3.7335 3.9201 4.1161 4.3219 4.5380 4.7649 5.0032 5.2533 5.5160 n 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2.00% 11.3484 12.1062 12.8493 13.5777 14.2919 14.9920 15.6785 16.3514 17.0112 17.6580 18.2922 18.9139 19.5235 20.1210 20.7069 3.00% 10.6350 11.2961 11.9379 12.5611 13.1661 13.7535 14.3238 14.8775 15.4150 15.9369 16.4436 16.9355 17.4131 17.8768 18.3270 4.00% 9.9856 10.5631 11.1184 11.6523 12.1657 12.6593 13.1339 13.5903 14.0292 14.4511 14.8568 15.2470 15.6221 15.9828 16.3296 Present Value of an Annuity (PVIFA) 5.00% 6.00% 9.3936 8.8527 9.8986 9.2950 10.3797 9.7122 10.8378 10.1059 11.2741 10.4773 11.6896 10.8276 12.0853 11.1581 12.4622 11.4699 12.8212 11.7641 13.1630 12.0416 13.4886 13.7986 14.0939 14.3752 14.6430 12.3034 12.5504 12.7834 13.0032 13.2105 7.00% 8.3577 8.7455 9.1079 9.4466 9.7632 10.0591 10.3356 10.5940 10.8355 11.0612 11.2722 11.4693 11.6536 11.8258 11.9867 8.00% 7.9038 8.2442 8.5595 8.8514 9.1216 9.3719 9.6036 9.8181 10.0168 10.2007 10.3711 10.5288 10.6748 10.8100 10.9352 9.00% 7.4869 7.7862 8.0607 8.3126 8.5436 8.7556 8.9501 9.1285 9.2922 9.4424 9.5802 9.7066 9.8226 9.9290 10.0266 10.00% 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 8.6487 8.7715 8.8832 8.9847 9.0770 9.1609 9.2372 n 24 25 26 27 28 29 30 31 32 33 34 35 36 5.00% 44.5020 47.7271 51.1135 54.6691 58.4026 62.3227 66.4388 70.7608 75.2988 80.0638 85.0670 90.3203 95.8363 6.00% 50.8156 54.8645 59.1564 63.7058 68.5281 73.6398 79.0582 84.8017 90.8898 97.3432 104.1838 111.4348 119.1209 7.00% 58.1767 63.2490 68.6765 74.4838 80.6977 87.3465 94.4608 102.0730 110.2182 118.9334 128.2588 138.2369 148.9135 Future Value of an Annuity (FVIFA) 8.00% 9.00% 66.7648 76.7898 73.1059 84.7009 79.9544 87.3508 95.3388 103.9659 124.1354 113.2832 136.3075 123.3459 149.5752 134.2135 164.0370 145.9506 179.8003 158.6267 196.9823 172.3168 215.7108 187.1021 10.00% 11.00% 12.00% 88.4973 102.1742 118.1552 98.3471 114.4133 133.3339 93.3240 109.1818 127.9988 150.3339 102.7231 121.0999 143.0786 169.3740 112.9682 134.2099 159.8173 190.6989 148.6309 178.3972 214.5828 164.4940 199.0209 241.3327 181.9434 221.9132 271.2926 201.1378 247.3236 304.8477 222.2515 275.5292 342.4294 245.4767 306.8374 384.5210 271.0244 341.5896 431.6635 236.1247 299.1268 380.1644 484.4631 13.00% 136.8315 155.6196 176.8501 200.8406 227.9499 258.5834 293.1992 332.3151 376.5161 426.4632 482.9034 546.6808 618.7493
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Personal Finance Turning Money into Wealth
ISBN: 978-0133856439
7th edition
Authors: Arthur J. Keown
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