EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 1, Problem 16PS
Summary Introduction
To Determine: The decision to buy a book or not which is shown in an advertisement to help earn money of amount $1 million without investments.
Introduction: The investor could become rich by $1 million by using a book without risk and without money down.
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d. If, instead, you decide to withdraw $170000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings? (Use trial-and-error, a financial calculator: solve for "N", or Excel: function NPER)
e. Assuming the most you can afford to save is $1500 per year, but you want to retire with 1000000 in your investment account, how high of a return do you need to earn on your investments? (Use trial-and-error, a financial calculator: solve for the interest rate, or Excel: function RATE)
*round to two decimal places for d) and e)*
What is the excel function and formula for this question?
Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on this investment?
You want to buy a home but not take out a mortgage. You want to buy it outright when you are able to do so. You estimate that the home you will want to buy will cost $500,000. You have $20,000 today to set aside for it. The bank will pay you 2.8% annual interest. How long will it be before you can buy your home?
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