Mr. & Mrs. Pribel wish to purchase a boat in 8 years when they retire. They are planning to purchase the boat using proceeds from the sale of their property which is currently worth $90,000 and its value is growing at 7 percent a year
The boat is currently worth $200,000 increasing at 5 percent per year. In addition to the value of their property, how much additional money should they deposit at the end of each year in an account paying 9 percent annual interest in order to be able to buy the boat upon retirement?
Value of the property upon retirement:
PV = $90,000, I = 7, N = 8, PMT=0
CPT FV = $154,637
Value of the boat upon retirement:
PV = $200,000, I = 5, N = 8, PMT=0
CPT FV = $295,491
Additional money needed upon retirement:
$295,491 - $154,637 = $140854
Amount of money needed to deposit at the end of each year:
PV=0, FV = $140,780, N = 8, I = 9%, PMT = ?
PMT = $12,765.69
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