**Sinking Fund Factor Table**The table below presents the sinking fund factor for $1 per period at different interest rates (%) for various periods (n).**Sinking Fund Factor of $1 per Period at i% for n Periods**| Period | 0.5% | 1.0% | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% | 4.0% | 4.5% | 5.0% | 5.5% | 6.0% | 6.5% | 7.0% | 7.5% | 8.0% | 8.5% | 9.0% | 9.5% | 10.0% ||--------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|| 1 | 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000| 1.0000|| 2 | 0.4988| 0.4975| 0.4963| 0.4951| 0.4939| 0.4928| 0.4916| 0.4904| 0.4892| 0.4878| 0.4866| 0.4853| 0.4842| 0.4829| 0.4817| 0.4805| 0.4793| 0.4781| 0.4769| 0.4756|| 3 | 0.3317| 0.3290| 0.3264| ### Financial Planning for RetirementRecent statistics show that only 54% of workers participate in their company's retirement plan, meaning that 46% do not. This lack of participation presents a significant risk, as reliance on Social Security alone may leave individuals without adequate income during retirement years.#### Example Calculation:Let's consider an example to illustrate the importance of early investment for retirement.**Case Study: Jill Collins**- **Age:** 20 years old- **Retirement Goal:** $280,000- **Retirement Age:** 60 years- **Annual Interest Rate:** 5% (compounded annually)**Problem:** How much does Jill need to invest each year to achieve her retirement goal?**Solution Steps:**1. **Identify key variables:** - Future Value ($ FV $) = $280,000 - Annual interest rate ($ r $) = 5% or 0.05 - Time period ($ t $) = 60 - 20 = 40 years2. **Use the Future Value of an Annuity formula:** \[ FV = P \frac{(1 + r)^t - 1}{r} \] Where $ P $ is the annual investment. Rearranging to solve for $ P $: \[ P = \frac{FV \cdot r}{(1 + r)^t - 1} \]3. **Plug in the values:** \[ P = \frac{280,000 \cdot 0.05}{(1 + 0.05)^{40} - 1} \]4. **Calculate intermediate steps:** - $ (1 + 0.05)^{40} = 7.04 $ (approx.) - $ 7.04 - 1 = 6.04 $5. **Compute the yearly investment:** \[ P = \frac{280,000 \cdot 0.05}{6.04} \]6. **Final calculation:** \[ P = \frac{14,000}{6.04} = 2319.87 \]Therefore, Jill Collins would need to invest approximately **$2,320** each year (when rounded to the nearest dollar) to meet her retirement goal of $280

Present value is the value of the future expected/calculated amount as of today. It is calculated as…

Bankrate.com reported on a shocking statistic: only 54% of workers participate in their company's retirement plan. This means that 46% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during retirement. Jill Collins, 20, decided she needs to have $280,000 in her retirement account upon retiring at 60. How much does she need to invest each year at 5% compounded annually to meet her goal? (Please use the following provided Table) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Each year investment

Bankrate.com reported on a shocking statistic: only 54% of workers participate in their company's retirement plan. This means that 46% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during retirement. Jill Collins, 20, decided she needs to have $280,000 in her retirement account upon retiring at 60. How much does she need to invest each year at 5% compounded annually to meet her goal? (Please use the following provided Table) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Each year investment

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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