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A-facial-surgery-is-estimated-to-cost-N25millon-in-10-years-time-A-50-years-old-woman-that-is-expecting-to-go-on-retirement-at-55years-is-planning-to-generate-funds-for-the-surgery-at-her-retirement




Question Number 41508 by psyche-ace last updated on 08/Aug/18
A facial surgery is estimated to cost N25millon in 10 years time.   A 50 years old woman that is expecting to go on retirement at 55years is planning to generate funds for the surgery at her retirement.  ow much should she set aside for the surgery if the interest rate is 14.75% at the time of retirement?   what is the present value of the cost of surgery?(as at the time the woman is 50years given the interest rate at that time is 11.5%)
$${A}\:\boldsymbol{\mathrm{facial}}\:\boldsymbol{\mathrm{surgery}}\:\boldsymbol{\mathrm{is}}\:\boldsymbol{\mathrm{estimated}}\:\boldsymbol{\mathrm{to}}\:\boldsymbol{\mathrm{cost}}\:\boldsymbol{\mathrm{N}}\mathrm{25}\boldsymbol{\mathrm{millon}}\:\boldsymbol{\mathrm{in}}\:\mathrm{10}\:\boldsymbol{\mathrm{years}}\:\boldsymbol{\mathrm{time}}.\: \\ $$$$\mathrm{A}\:\mathrm{50}\:\boldsymbol{\mathrm{years}}\:\boldsymbol{\mathrm{old}}\:\boldsymbol{\mathrm{woman}}\:\boldsymbol{\mathrm{that}}\:\boldsymbol{\mathrm{is}}\:\boldsymbol{\mathrm{expecting}}\:\boldsymbol{\mathrm{to}}\:\boldsymbol{\mathrm{go}}\:\boldsymbol{\mathrm{on}}\:\boldsymbol{\mathrm{retirement}}\:\boldsymbol{\mathrm{at}}\:\mathrm{55}\boldsymbol{\mathrm{years}}\:\boldsymbol{\mathrm{is}}\:\boldsymbol{\mathrm{planning}}\:\boldsymbol{\mathrm{to}}\:\boldsymbol{\mathrm{generate}}\:\boldsymbol{\mathrm{funds}}\:\boldsymbol{\mathrm{for}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{surgery}}\:\boldsymbol{\mathrm{at}}\:\boldsymbol{\mathrm{her}}\:\boldsymbol{\mathrm{retirement}}. \\ $$$$\boldsymbol{\mathrm{ow}}\:\boldsymbol{\mathrm{much}}\:\boldsymbol{\mathrm{should}}\:\boldsymbol{\mathrm{she}}\:\boldsymbol{\mathrm{set}}\:\boldsymbol{\mathrm{aside}}\:\boldsymbol{\mathrm{for}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{surgery}}\:\boldsymbol{\mathrm{if}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{interest}}\:\boldsymbol{\mathrm{rate}}\:\boldsymbol{\mathrm{is}}\:\mathrm{14}.\mathrm{75\%}\:\boldsymbol{\mathrm{at}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{time}}\:\boldsymbol{\mathrm{of}}\:\boldsymbol{\mathrm{retirement}}?\: \\ $$$$\boldsymbol{\mathrm{what}}\:\boldsymbol{\mathrm{is}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{present}}\:\boldsymbol{\mathrm{value}}\:\boldsymbol{\mathrm{of}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{cost}}\:\boldsymbol{\mathrm{of}}\:\boldsymbol{\mathrm{surgery}}?\left(\boldsymbol{\mathrm{as}}\:\boldsymbol{\mathrm{at}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{time}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{woman}}\:\boldsymbol{\mathrm{is}}\:\mathrm{50}\boldsymbol{\mathrm{years}}\:\boldsymbol{\mathrm{given}}\:\boldsymbol{\mathrm{the}}\:\boldsymbol{\mathrm{interest}}\:\boldsymbol{\mathrm{rate}}\:\boldsymbol{\mathrm{at}}\:\boldsymbol{\mathrm{that}}\:\boldsymbol{\mathrm{time}}\:\boldsymbol{\mathrm{is}}\:\mathrm{11}.\mathrm{5\%}\right) \\ $$

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