Earl Ezekiel wants to retire in San Diego when he is 65 years old.
Earl is now 49.
He needs $540,000 to retire comfortably.
Rate of Interest is 8% compounded semi annually.
We need to calculate present value of $540,000.
Present Value is given by :
Future Value / ( 1 + i ) ^ n
where i = rate of interest/ 2, as amount is compounded semi annually = .08/2 = .04
n = no of years * 2
= (65-49) * 2
= 32
= 540,000/ (1 + .04)^32
= 540,000/3.508059
= 153931.28
Earl must invest $ 153,931 today to meet his $540,000 goal at the age of 65.
Hope it helps.
Thank you..!!
