# Time value of money

Aug 2nd, 2016
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Your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65

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Question 9A)Annual payments (A):PV (withdrawals) = PV (savings)1/(1.07)30[125,000/0.07(1/{1-1/1.0720})] = A/0.07(1-1/1.0730)0.13[1,785,714(1.35)]=12.43AA = \$25,213B)The present value of 20 instalments of 125,000 at 7% = 125,000 * 10.594 =\$1,324,250The lump sum payment needed is the present

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