Question

Jensen will retire on his 65th birthday. He wants to withdraw $150,000 from his reti account on each birthday from his 66th to his 85th to cover his living expense. need in his retirement account on his 65th birthday? Assume interest rate is 10%.

A. 1,297,304
B. 1,254,738
C. 8,291,250
D. 1,277,034

Answer 1

The correct answer is option (d).

Step-by-step explanation:

According to the scenario, the given data are as follows:

Time period ( Nper) = 20 years

Interest rate (rate) = 10%

Payment (pmt) = $150,000

So, we can calculate the Present value by using financial calculator.

The attachment is attached below.

So, Present Value = $1,277,034.56

The amount that needs to be on 65th birthday is 1,277,034.