Chapter 4-2
Example 4.5
How much is needed today to provide an annual amount of $50,000 each year for 20 years,
at 9% interest each year?
P =?
P = $50,000 (P/A, 9%, 20%)
P = $50,000(9.1285)
P = $456,427
Example 4.6
IF you had $500,000 today in an account earning 10% each year, how much could you
withdraw each year for 25 years
A = $500,000 (0.1102)
A= $55,100
Example 4.7
How much will you have in 40 years if you save $3,000 each year and your account earns 8%
interest each year?
F = $3,000(F/A, 8%, 40)
F = $3,000(259.0565)
F = 777,170
Example 4.8
How much would you need to set aside each year for 25 years, at 10% interest, to have
accumulated $1,000,000 at the end of the 25 years?
A = 1,000,000 (A/F, 10%, 25)
A = 1,000,000(0.0102)