Asked by Dayne Krachey on Apr 29, 2024
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Your client will retire this year. Currently she has $560,000 in accumulated capital. She wants to invest this capital to provide equal payments at the end of each year for 20 years, at which time the capital will be fully depleted. If her capital earns 7.5% compounded annually, what annual payment will she receive? Taken from CIFP course materials.
Compounded Annually
Interest or returns on an investment are calculated once per year and added to the principal amount.
Annual Payment
A payment made once a year for a particular commitment or service.
Accumulated Capital
The total value of all capital assets owned by an entity after depreciation and amortization.
- Implement strategies based on the time value of money to evaluate the fiscal worth of bonds and annuities.
- Determine the long-term sustainability of funds and investment assets under defined conditions for depositing or withdrawing.
- Utilize fiscal calculations in planning towards retirement and investment aspirations.
Verified Answer
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Learning Objectives
- Implement strategies based on the time value of money to evaluate the fiscal worth of bonds and annuities.
- Determine the long-term sustainability of funds and investment assets under defined conditions for depositing or withdrawing.
- Utilize fiscal calculations in planning towards retirement and investment aspirations.