FVIFA: Future Value Interest Factor of an Annuity (D-2)°Ex: You invest $5000 annually into your Roth IRA which is earning 8% annually. After 35 years, what is the balance of your IRA?
3. Sinking Fund (FVIFA)deposits that are needed to accumulate a future amount°Ex: You are planning on retiring in 40 years and you would like to save an additional $2,500,000 in addition to your retirement savings. How much will you need to SAVE ANNUALLY– earning 8% interest – in order to reach your goal?
4. Present Value of a Lump SumWhat is a future benefit worth to you today?PVIF: Present Value Interest FactorPresent Value Future Value (discounting over time)°Ex: You have just won a $2,000,000 court settlement which will be paidto you in 10 yrs. IN other words, you won’t receive anything until the end of the 10thyear. Assuming 7% interest, what is your settlement worth to you TODAY?