you are 21 years old today. your grandparents set up a trust fund that will pay you​ $25,000 per year for 20​ years, starting on your 65th birthday to supplement your retirement. if the trust can earn​ 7.5% per​ year, how much will your grandparents need to put in the trust fund today​ (rounded to the nearest​ $10)?

Answers

Answer 1

The amount that your grandparents need to put in the trust fund today is $11,370.

What is present value?

The idea of present value holds that money today is worth more than it will be in the future. In other words, money received in the future is not as valuable as money obtained today in the same amount. The value of $1,000 now will exceed $1,000 in five years.

PV = $25,000 * PVIFA7.5%, 20 * PVIF7.5%, 43

= $25,000 * 10.194 * 0.045

= $11,368.96

= $11,370

Therefore, it should be noted that $11,370 needs to be out into the account.

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Related Questions

what is a global network of organizations and activities that supply a firm with goods and​ services? part 2 a. supply tree b. supply chain c. vendor tree d. vendor network e. provider network

Answers

A supply chain is the global network of organizations and activities that supply a firm with goods and​ services.

What is a supply chain?

In management, a supply chain refers to the network of individuals and companies who are involved in creating a product and as well as delivering it to the consumer. The links on the supply chain begin with the producers of the raw materials and end when the van delivers the finished product to the end user.

Furthermore, some of the components of a supply chain include producers, vendors, warehouses, transportation companies, distribution centers and retailers. In conclusion, the functions performed by a supply chain include product development, marketing, operations, distribution, finance, customer service etc.

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