1Rita Hect wants to receive 4200 each year for 15 years Have

1.)Rita Hect wants to receive $4,200 each year for 15 years. Have much Rita invest today at 5% compounded annually?

2.)Jim Hunter has decided to retire to Florida in 10 years. What amount should Jim invest today so that he will be able to withdraw 25, 000 at the end of each year for 30 years after he retires? Assume he can invest money at 9% interest cinounded annually.

Solution

A= P (1+ (R/100))^n

a= amount = $4200

n= no. of years = 15

rate of interest = 5%

4200 = P x (1+(5/100))^15

P = $2020.27

Hence, rita must invest $2020.27