Question

Your finance professor suggests that you should have $2,500,000 in your retirement portfolio before you even THINK about retiring. Recently, your uncle sold valuable California real estate and handed you a check for $300,000. (This is the amount you have after paying taxes. He is now your favorite uncle.) How much of the $300,000 must you set aside today if you invest a portion of the money at an annual rate of 8.0% and you wish to retire in 35 years with the amount suggested by your finance professor

Answer 1

the present value is $169,086.35

Step-by-step explanation:

The computation of the present value is as follows:

As we know that

Present value = Future value ÷ (1 + rate of interest)^number of years

= $2,500,000 ÷ (1 + 0.08)^35

= $169,086.35

Hence, the present value is $169,086.35

It could be simply calculated by applying the above formula