Sarah Wiggum would like to make a single investment and have 1.8 million at the time of her retirement in 25 years. She has found a mutual fund that will earn 8 percent annually. How much will Sarah have to invest to day? If Sarah earned an annual return of 17 percent, how soon could she then retire?
( #3) You are considering investing in a security that will pay you $2000 in 35 yrs.(a) If the appropriate discount rate is 12 percent, what is the present value of this investment? (b) Assume these investments sell for $834 in return for which you receive $2,000 in 35 years. What is the rate of return investors earn on this investment if they buy it for $834?
(5)spread sheet) If you invest $860 in a bank where it will earn 11Percent compounded annually, how much will itbe worth at the end of 8yrs?
(6) spreadsheet)In 18 years,you would like to have $270,000 to buy a vacation home. If you have only $60,000,at what rate must it be compound annually for it to grow to $270,000 in 18 years?
(7) calculating an EAR –You have a choice of borrowing money from a finance company at 22 percent compounded monthly or borrowing money from a bank at 24 percent compounded weekly. Which alternative is the most attractive?
(8)You are graduating from college at the end of this semester. You decided ti invest $5,000 at the end of each year into a Roth IRA for the next 45 years. If you earn 8 percent compounded annually on your investment, how much will you have when you retire in 45 years? How much will you have if you wait 10 years before beginning to save and only make 35 payments into your retirement account?
(1) Future value) Leslie Mosellam who recently sold her Porsche placed $8,000 in a savings account paying annual compound interest of 5 percent. (a) calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6, and 16 years. (b) Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9 percent. Rework part (a) using 7 percent and 9 percent . (c) What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did?
(9) Springfield mogul Montgomery Burns, age 70 wants to retire at age 100 so he can steal candy from babies full time. Once Mr. Burns retires, he wants to withdraw $1.2 billion at the beginning of each year for 5 years from a special offshore account that will pay 24 percent annually. In order to fund his retirement, Mr. Burns will make 30 equal end of the year deposits in this same special account that will pay 24 percent annually. How much money will Mr. Burns need atage 100, and how large of an annual deposit must he make to fund this retirement account?
(4) Much to your surprise, you were selected to appear on the TV show the price is right. As a result of your prowess in identifying how many rolls of toilet paper a typical American family keeps on hand, you win the opportunity to choose one of following : $1,000 today,$ 6,000 in 8 years; or $32,000 in 27 years. Assuming that you can earn 9 percent on your money, which should you choose? If you offered $6,000 in 8 years and you can earn 9 percent on your money, what is the present value of $6,000.
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