You are about to set sail on your long-term goal of sailing the seven seas over
ID: 2821291 • Letter: Y
Question
You are about to set sail on your long-term goal of sailing the seven seas over a eight-year period. You anticipate expenses to run $400,000 per year and that you will be earning 6% interest on your savings. Calculate how much you will need in savings before you set sail to cover the cost of the adventure using the following methods:
a. Reference table. Use Table A-4 below. (Round final answer to 2 decimal places.)
Present value:
b. Financial calculator (Round your answer to 2 decimal places.)
Present value:
Present Value Interest Factors for Annuity (PVIFA) PVIFA for $1 Annulty Discounted at i Percent for n Perlods (PVA PMT x PVIFA 0.962 0.952 1.859 2.723 0.943 0.935 0.909 0.893 0.870 0.862 0.855 0.833 1.808 3.387 4.767 1.547 2.140 2.639 1.566 2.174 2.829 2.210 2.743 2.914 3.890 5.795 6.728 4.355 4.231 5.389 6.733 4.207 5.535 5.995 4.078 6.802 6.247 8.983 4.659 4.836 4.988 7.722 4.339 4.486 6.207 6.492 6.805 4.327 11.255 10.575 12.134 11.348 10.635 13.004 2.106 11.296 10.563 13.865 2.849 11.938 11.118 0.380 14.718 13.578 2.561 11652 10.838 10.106 15.562 14.292 13.166 12.166 1274 10.477 16.398 14.992 13.754 12.659 690 10.828 10.059 17.226 15.678 4.324 13.134 2.085 11.158 10.336 18.046 16.351 14877 13.590 12.462 11.470 10.594 18.857 17.011 15.415 14.029 12.821 11.76410.836 4.793 9.986 9.394 8.853 8.358 6.424 5.342 6.982 5.008 4.802 4.876 4.938 5.847 6.047 6.198 6.142 4.675 4.730 6.974 6.729 5.749 5.222 5.273 5.534 5.584 9.372 6.467 5.033 8.950 8.365 6.259 4.870 10.017 9.292 529 75 5.798 5.066 2.938 468 989 20.000 20.389 11.350 10.343 754 29.409 489 75 757 5.548 225 17.663 36.095 29.490 24.519 20.720 7.774 15.456 13.606 12.108 10.881 36.727 29.892 24.775 20.885 17.880 15.524 13.650 .137 10.900 37.354 30.287 25.025 21.043 17.981 15.589 13.692 .164 10.918 37.974 30.673 25.267 21.195 18.077 15.650 13.730 12.189 10.934 38.588 31.052 25.502 21.341 18.169 15.708 13.767 .12 10.948 39.196 31.424 25.730 21.482 18.256 15.762 13.801 1.233 10.962 29.0 12.077 10.861 4.998 9.863 6.242 6.243 9.024 9.030 9.036 6.657 5.553 8.293 8.297 5.879 5.879 4.999 4.999 6.245 6.246 6.246 9.906 5.262 5.262 5.880Explanation / Answer
Below is the calculation of savings that is needed before set sail to cover the cost of the adventure using the following methods:
a) Check the reference table to percentage 6 in row and period 8 in column, the figure is 6.21.
Fund needed to cover the expense = 6.21 * $400,000 = $2,484,000.
b) Use your financial calculator and put the below:
FV = 0
PMT= $400,000
I/Y = 6
N= 8
Press CPT and then PV, you will get the answer as $2,483,917.52
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.