Your grandparents are talking about their retirement in a year. they told you that they should have enough in their retirement funds to pull $50,000 a year for 20 years, starting one year from today. if the discount rate is 5 percent, how much should they have in their retirement account now? round to the nearest cent. do not include any unit (if your answer is $111.11, then type 111.11 without $ sign.)

Present value of annuity = 623,110.5  

Explanation:

To determine present value of annuity of $50,000.

Annuity is fixed series of cash flows for a definite time period.

present value of money at the time retirement is

Present value of annuity =

where,

n of year of payment left to receive

r =rate of interest

Present value of annuity =

Present value of annuity = 50,000 * 12.46221

Present value of annuity = 623,110.5  

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

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