Burton Bush wants to retire in Arizona when he is 80 years of age. Burton, who is now 55, believes he will need $400,000 to retire comfortably. To date, he has set aside no retirement money. If he gets an interest of 6 percent compounded annually, he will have to invest today: (Use the tables in the handbook)

$92,300

$69,900

$96,500

$93,200

None of these

Question

Mathematics

Nevaeh Calhoun

5 September, 12:05

Burton Bush wants to retire in Arizona when he is 80 years of age. Burton, who is now 55, believes he will need $400,000 to retire comfortably. To date, he has set aside no retirement money. If he gets an interest of 6 percent compounded annually, he will have to invest today: (Use the tables in the handbook)

$92,300

$69,900

$96,500

$93,200

None of these

+2

Answers (1)

Know the Answer?

Moshe Hood · Answer 1

N = Number of years = 80 - 55 = 25

A = $400,000

r = 6% = 0.06

A = P (1 + r) ^n

400,000 = P (1 + 0.06) ^25 = P (1.06) ^25 = 4.292P

P = 400,000 / 4.292 = $93,200