Retirement Funding (PV of Annuity)
Exercise ID: tvm-real-005
Description
A retiree wants to receive $45,000 at the end of each year for 25 years. If the fund earns 5% annually, how much is needed in the fund today?
Given Values
Objective
Calculate PV
Steps
Total 10 stepsStep 1:Clear TVM Registers
💡 Always clear TVM before starting a new problem.
Key Sequence:
Before Key Press:
0.00
After Key Press:
0.00
⏱ 1500ms
Step 2:Input N = 25
Key Sequence:
Before Key Press:
0.00
After Key Press:
25
⏱ 1400ms
Step 3:Store in N
Key Sequence:
Before Key Press:
25
After Key Press:
N=25.00
⏱ 1000ms
Step 4:Input I/Y = 5
Key Sequence:
Before Key Press:
N=25.00
After Key Press:
5
⏱ 1200ms
Step 5:Store in I/Y
Key Sequence:
Before Key Press:
5
After Key Press:
I/Y=5.00
⏱ 1000ms
Step 6:Input PMT = 45000
Key Sequence:
Before Key Press:
I/Y=5.00
After Key Press:
45000
⏱ 2000ms
Step 7:Store in PMT
Key Sequence:
Before Key Press:
45000
After Key Press:
PMT=45000.00
⏱ 1000ms
Step 8:Input FV = 0
Key Sequence:
Before Key Press:
PMT=45000.00
After Key Press:
0
⏱ 1200ms
Step 9:Store in FV
Key Sequence:
Before Key Press:
0
After Key Press:
FV=0.00
⏱ 1000ms
Step 10:Compute PV
Key Sequence:
Before Key Press:
FV=0.00
After Key Press:
PV=-634218.47
⏱ 1500ms
- 1.Using BGN mode
- 2.Entering PMT as negative (implies paying out, not receiving)
- 3.Not setting FV to 0
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