1.
To find out how much money she requires now to fund her travels,
we need to find out the present value of $ 29,000 each year for the
next 6 years
|
Year |
Amount |
PV Factor |
Present Value |
|
|
|
1
/ (1 + 10%)^Year |
|
|
1 |
$
29,000.00 |
0.909 |
$ 26,363.64 |
|
2 |
$
29,000.00 |
0.826 |
$ 23,966.94 |
|
3 |
$
29,000.00 |
0.751 |
$ 21,788.13 |
|
4 |
$
29,000.00 |
0.683 |
$ 19,807.39 |
|
5 |
$
29,000.00 |
0.621 |
$ 18,006.72 |
|
6 |
$
29,000.00 |
0.564 |
$ 16,369.74 |
|
|
|
|
|
|
|
|
|
$ 126,302.56 |
2. If interest rate is 6%
|
Year |
Amount |
PV Factor |
Present Value |
|
|
|
1
/ (1 + 6%)^Year |
|
|
1 |
$
29,000.00 |
0.943 |
$ 27,358.49 |
|
2 |
$
29,000.00 |
0.890 |
$ 25,809.90 |
|
3 |
$
29,000.00 |
0.840 |
$ 24,348.96 |
|
4 |
$
29,000.00 |
0.792 |
$ 22,970.72 |
|
5 |
$
29,000.00 |
0.747 |
$ 21,670.49 |
|
6 |
$
29,000.00 |
0.705 |
$ 20,443.86 |
|
|
|
|
|
|
|
|
|
$ 142,602.41 |
|
|
|
|
|
