Clarence Weatherspoon, a super salesman contemplating retirement on his fifty-fi
ID: 2471183 • Letter: C
Question
Clarence Weatherspoon, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on an 8% basis that will enable him to withdraw $33,400 per year on June 30, beginning in 2018 and continuing through 2021. To develop this fund, Clarence intends to make equal contributions on June 30 of each of the years 2014–2017.
(a)
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Clarence Weatherspoon, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on an 8% basis that will enable him to withdraw $33,400 per year on June 30, beginning in 2018 and continuing through 2021. To develop this fund, Clarence intends to make equal contributions on June 30 of each of the years 2014–2017.
Explanation / Answer
No of Years beginning in June , 2017 and continuing through June ,2021 = 4 years.
The balance of the fund equal on June 30, 2017, in order for Clarence Weatherspoon to satisfy his objective = 33,400*PVIFA(8%,4)
= 33,400*3.3121
= $110,625.04