You have accumulated some money for your retirement You are

You have accumulated some money for your retirement. You are going to withdraw $69,776 every year at the end of the year for the next 17 years. How much money have you accumulated for your retirement? Your account pays you 5.03 percent per year, compounded annually. To answer this question, you have to find the present value of these cash flows.

Solution

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=69776/1.0503+69776/1.0503^2+69776/1.0503^3+............+69776/1.0503^17

=69776[1/1.0503+1/1.0503^2+1/1.0503^3+..........+1/1.0503^17]

=69776*11.24884748

which is equal to

=$784,899.58(approx)(Please note that intermediate calculations have not been rounded off].