Joe Downey is currently 65 years of age. He is currently drawing $20,000 a year out of his IRA. He expects to live to 100 and wants to know what he needs now to insure himself that he will be able to draw the $20,000 at the beginning of each year for the next 35 years. He believes the account will earn 6 percent compounded annually for the next 35 years. How much money does he need in his account today?
Introduction:
The given problem asks for value today is nothing but the calculation of the present value. Hence with the available future value, rate of interest & n the number of years helps in calculating the present value.Solution:
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