Sarah Wiggum would like to make a single investment and have $2.7 million at the

Question

Sarah Wiggum would like to make a single investment and have $2.7 million at the time of her retirement in 25 years. She has found a mutual fund that will earn 3 percent annually. How much will Sarah have to invest today? If Sarah invests that amount and could earn a 15 percent annual return, how soon could she retire assuming she is still going to retire when she has $2.7million?Click on the table icon to view the PVIF table

To have $2.7 million at retirement, the amount Sarah must invest today is $1289535. (Round to the nearest cent.)

Homework: 2-3 MyFinanceLab: Assignment: Module Two Homework Save Score: 0 of 1 pt 5 of 10 (5 complete) HW Score: 40%, 4 of 10 pts Problem P3-15 (similar to) Question Help Sarah Wiggum would like to make a single investment and have $2.7 million at the time of her retirement in 25 years. She has found a mutual fund that will earn 3 percent annually. How much will Sarah have to invest today? If Sarah invests that amount and could earn a 15 percent annual return, how scon could she retire assuming she is still going to retire when she has $2.7 million? Click on the table icon to view the PVIF table EEB To have $2.7 million at retirement, the amount Sarah must invest today is $ 1289535. (Round to the nearest cent.) lf Sarah invests that same amount and earn a 15% annual return, she could retire in approximately years. (Round to one decimal place.) Data Table Present Value of $1 (PVIF) n 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 1 0.990 0.98B0 0.971 0.9620.952 0.943 0.935 0 2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0 3 0.971 0.942 0.915 0.8890.8640.840 0.816 0.7940.772 0.751 0.731 0.712 0.6930.675 0.658 0.641 0.6240.609 0.593 0.579 4 0.961 0.924 0.888 0 5 0.951 0.906 0.863 0.822 0.7840.747 0.713 0.681 0.6 0.917 0.909 0.901 0.8930 0.847 0.840 0.833 0.877 0.870 0.8620 0.769 0.756 0.743 0.731 0.718 0.7060.694 0.826 0.812 0.797 0.7 0.823 0.792 0.763 0 0.708 0.6830.659 0.636 0.613 0.5920.5 0.552 0 0.621 0.593 0.567 0.5430.5190.497 0.476 0 0.516 0.499 0.4 0.437 0.419 0.402 0.314 0.296 0.279 0.209 0.194 0.388 0.3500.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.1480.135 6 0.942 0.888 0.837 0.790 0.7460.705 0.686 0.6300.596 0.584 0.535 0.5070.480 0.456 0.432 0.410 0.390 0.370 0.3520.335 7 0.933 0.871 0.813 0.7600.711 0.665 0.623 0.5830.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.5400.502 0.467 0.4340.404 0.3760.3510.327 0.305 0.285 0.266 0.249 0.2 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0 10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.4630.422 0.386 0.352 0.322 0.2950.2700.247 0.227 0.208 0.191 0.1760.16 11 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.4 12 0.887 0.788 0.701 0.625 0.557 0.497 0.4440.397 0.356 0.319 0.286 0.257 0.2310.208 0.187 0.168 0.152 0.137 0.124 0.112 13 0.879 0.773 0.681 0.6010.530 0.469 0.415 0 14 0.870 0.758 0.661 0.5770.505 0.442 0.388 0 15 0.861 0.743 0.642 0 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0 19 0.828 0.686 0.570 0.4750.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.09 0.083 0.070 0.060 0.0510.0430.037 0.031 20 0.820 0.673 0.554 0.456 0.3 21 0.811 0.660 0.538 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.2430.2 0.326 0.2900.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.1600.140 0.123 0.108 0.0950.0840.074 0.065 0.218 0.188 0.163 0.141 0.1230.107 0.093 0.081 0.0710.062 0.0 0.231 0.1980.170 0.146 0.125 0.108 0.093 0.0800 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.069 0 0.060 0.052 0.045 0.051 0.044 0.038 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0 0.073 0.061 0.051 0.0430.037 0.031 0.026 0.3591 0.294 0.242 0. 91 0.1641 0.1351 0.112 0.093 0.0771 0.0641 0.053 0.044 00 71 0.031 0.0261 0.022 Print Done Enter your answer in the answer box and then click Check Answer.

Explanation / Answer

So, Using Excel and formula

We need to find out the present value of 2.7 million which would be invested at 3%, so

PV*(1+3%)^15 = 2.7 so PV = 1289535 Now,

if we get interest as 15% then we have to calculate the years

so, 1289535*(1+15%)^t = 2700000

SO t = 5.28 years

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