Equalizing Future Value – Version 11/2000

All Data Entry cell characters are shown in red.

First model of two: This model seeks to answer the question – What allocation of a specified investment dollar amount will yield equal future values for several family members, at a specified distribution age.

We know the present value (current resources). We are solving for the future value.

For example, a grandparent has $50,000 wants to deposit funds in separate accounts for his grandchildren such that each will receive an equal dollar amount at age 20. Keep in mind that providing an equal dollar amount does not mean that equal purchasing power will be provided.

Data Entry:

Enter current Resources: Enter the gross amount of money that is to be dedicated to the plan.

Earnings Assumption: Enter the investment earnings assumption. Any variance in this value will alter the future value results.

Names: Enter the names of the fund recipients.

Current age: Enter the current ages of each recipient of the future value.

Distribution Age: Enter the age at which each recipient will receive the money from there account.

The model then calculates the recommended allocation of the current resources so the future dollar amounts will be equal at the distribution age of each person. The future value for each is also calculated.

This model seeks to answer the question – What current resource (and allocation of that resource) will provide a specified future value for a group of family members.

We know the future value we want each person to receive. We are solving for the present value (current resources).

For example, a grandparent wants to provide $20,000 in separate accounts for her grandchildren at age 20. What deposit will be required today to achieve the goal. Keep in mind that providing an equal dollar amount does not mean that equal purchasing power will be provided

Desired Future Value: Enter the gross amount of money that is to be distributed to each family member.

Earnings Assumption: Enter the investment earnings assumption. Any variance in this value will alter the future value results.

Names: Enter the names of the fund recipients.

Current age: Enter the current ages of each recipient of the future value.

Distribution Age: Enter the age at which each recipient will receive the money from there account.

The model then calculates the current resources (and recommended allocation) so that the future dollar amounts will be equal at the specified amount at the distribution age of each person.