Question

Approximately how much should be accumulated by the beginning of retirement to provide a $2,500 monthly check that will last for 25 years, during which time the fund will earn 8% interest with monthly compounding?

Answer 1

Answer:

$323,911.53

Explanation:

We use the Present value formula for this question i.e shown in the attachment below:

Data provided in the question  

Future value = $0

Rate of interest = 8% ÷ 12 = 0.66667%

NPER = 25 years  × 12 months = 300 months

PMT = $2,500

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value is $323,911.53