Question

Alan Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. Alan has recently come into an inheritance of $410,900. He estimates that the boat he wants will cost $334,300 when he retires in 6 years. Click here to view factor tables How much of his inheritance must he invest at an annual rate of 4% (compounded annually) to buy the boat at retirement? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Answer 1

$264202

Step-by-step explanation:

We use the present value formula to calculate the money to be invested now in order to get 334300

PV = FV *1/(1+R)^n

334300*1/(1.04)^6

=$264202