[computerguy79]

Ok so here's what I'm trying to figure out:

I want to set up an annuity for retirement. I can set aside $2000 at the end of each yr for the next 20 yrs and it will earn 6% interest. What lump sum will I need to set aside today at 6% annual interest to have the same retirement fund available in 20 yrs?

So here is what I have so far:
2000 * 33.066 = $66132
FV = $66132.00

33.066 is found in a table corresponding to how much $1 is worth after 20 periods on an ordinary annuity.

So if I invests $2k a year for 20 yrs he has $66132.00 at the end of the 20 yrs at 6% annual interest.

Now I do not know how to figure out the lump sum investment that would have to be made today in order to get this same amount.

Can anyone please help me?
Thank you

[morgaine300]

You really should post this over in the homework help forum since that's what it obviously is.

I want to set up an annuity for retirement. I can set aside $2000 at the end of each yr for the next 20 yrs and it will earn 6% interest. What lump sum will I need to set aside today at 6% annual interest to have the same retirement fund available in 20 yrs?

So here is what I have so far:
2000 * 33.066 = $66132
FV = $66132.00

Right idea. Wrong factor cause you accidentally used 5%.

Now I do not know how to figure out the lump sum investment that would have to be made today in order to get this same amount.

PV of $1. It's a lump sum instead of an annuity, so different set of charts. And instead of wanting to know what it will be in the future, you're wanting to know what a future value is worth today, meaning you're solving for a present value of a lump sum.

Although you need to fix your future value first.