Discount Rate 7% per year

1 2 3 4 5 6 7
Year
2001 2002 2003 2004 2005 2006 2007
Base Salary 16,000.00 17,000.00 17,000.00 17,000.00 19,000.00 19,000.00 23,000.00
See PV table 0.935 0.873 0.816 0.763 0.713 0.666 0.623
Present Value 14,960.00 14,841.00 13,872.00 12,971.00 13,547.00 12,654.00 14,329.00

Signing Bonus 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00

See PV table 0.935 0.873 0.816 0.763 0.713
Present Value 1,870.00 1,746.00 1,632.00 1,526.00 1,426.00 - -

3% interest per year

Deferred Payment 5,000.00 4,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
See FV table 1.344 1.384 1.426 1.469 1.513 1.558 1.605
Future Value 6,720.00 5,536.00 4,278.00 4,407.00 4,539.00 4,674.00 4,815.00

See PV table 0.935 0.873 0.816 0.763 0.713 0.666 0.623

Present Value 6,283.20 4,832.93 3,490.85 3,362.54 3,236.31 3,112.88 2,999.75
 8 9 10
2008 2009 2010 TOTAL
27,000.00 27,000.00 27,000.00 209,000.00
0.582 0.544 0.508
15,714.00 14,688.00 13,716.00 141,292.00

10,000.00

- - - 8,200.00 2000*4.1
Using PV of annuity

3,000.00 3,000.00 3,000.00 33,000.00

1.653 1.702 1.754
4,959.00 5,106.00 5,262.00 50,296.00
252,000.00
269,296.00 True Promised Payment
0.582 0.544 0.508
2,886.14 2,777.66 2,673.10 35,655.35

185,147.35 PV of the Contract

252,000.00 Contract Price
- 66,852.65 diff
a. How much will you have in your retirement account on the day you retire?
Investment / year 5000
Interest Rate 10%
Period 43
Future Value -₱2,962,003.46 2,962,000.00

b. If you want to make one lump-sum investment today for your retirement, how much would that lump sum need to be?
Years 43 n
Interest Rate 10% r
Future Value 2,962,000.00
Present Value -₱49,169.93 49,170.00

c. If you hope to live for 20 years in retirement, how much can you withdraw every year in retirement (starting one year afte
so that you will just exhaust your savings with the twentieth withdrawal (assuming your savings continue to earn 10% in reti

Annual Withdrawal 2,962,000.00 FV computed in part a

Amount 57.275 FV of ordinary annuity for 20 periods @ 10% (see table)
= 51,715.41

PV 0
FV computed in part 2,962,000.00
Interest Rate 10%
Period 20
Annual Withdrawal -₱51,715.41

d. If you decide to withdraw $300,000 per year in retirement (starting one year after retiring), how many years will it take u

Present Value 0
Future Value 2,962,000.00
Interest Rate 10%
Annual Payment - 300,000.00
Years 7.20587987555769 Approx 7 yrs & 3 mos.

Future Value 2,962,000.00

Annual Payment 300,000.00
= 9.87333333333333 Look for this factor in FV factor of Ordinary Annuity Table
The value is between period 7 and 8
e. Assuming the most you can afford to save is $5,000 per year, but you want to retire with $1 million in your investment ac

Present Value 0
Future Value 1,000,000.00
Annual Saving - 5,000.00
Years 43
Interest Rate 6.23%
 lump sum need to be?

ent (starting one year after retirement)

ntinue to earn 10% in retirement)?
many years will it take until you exhaust your savings?
on in your investment account, how high of a return do you need to earn on your investments?