Albert Einstein once noted that, “Compounding of interest is one of humanity’s greatest inventions”. To illustrate the mind-boggling effects of compounding, what amount should you invest quarterly for 30 years in a fund that earns 8% compounded quarterly, to be able to accumulate P5,000,000 when you retire in 30 years?
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Albert Einstein once noted that, “
illustrate the mind-boggling effects of compounding, what amount should you invest quarterly for 30 years in a fund
that earns 8% compounded quarterly, to be able to accumulate P5,000,000 when you retire in 30 years?
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- “Compounding of interest is one of humanity's finest inventions,” Albert Einstein famously said. To demonstrate the mind-boggling consequences of compounding, how much should you invest weekly for 30 years in a fund that yields 8% compounded quarterly in terms of accumulating P5,000,000 by the time you retire?SHOW COMPLETE AND ORGANIZED SOLUTION1) A man wishes to bequeath to his son P100,000 ten years from now. What amount should he invest now if it will earn interest of 8% compounded annually during the first 5 years and 12% compounded quarterly during the next 5 years?2)If you are to invest your money, which is a better option: 12% compounded monthly, 12.20% compounded quarterly, 12.35% compounded semi-annually or 12.5% compounded annually?3) Determine the ordinary and exact simple interest on P60,000.00 for the period from January 16 to November 26, 2008 if the rate of interest is 14%How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%
- Now consider your financial objective is to save $500,000 for preparing your retirement, assuming 30 years from now. If you invest your RRSP savings in a mutual fund which can realize an average return of 10% per year. To achieve your goal, how much do you need to save at the end of each year over the 30-year period? a. 4,039.26 b. 3,039.62 c. 2,985.54 d. 10,988.32 What is the FV of $100 deposited today into an account with an APR 12.6%, compounded semiannually for 10 years? a. 1478.96 b. 3460.06 c. 327.63 d. 339.36 A car dealer offers payment of $525.32 per months for 60 months on a $30,000 car after making a $5000 down payment. What's the loan's APR? a. 10.4798% b. 9.5224% c. 1.9609% d. 0.7935%You would like to establish a trust fund that would provide annual scholarships of $100,000 today and then grow at 2.0% forever (i.e. at time 1 there will be a $102,000 scholarship award). How much would you have to deposit today in one lump sum to achieve this goal if you can earn a guaranteed 7.0 percent rate of return? 2,140,000 2,355,556 1,945,455 2,650,000Imagine that your goal is to retire 34 years from today with $1,000,000 in savings. Assuming that you currently (i.e., today) have $5,000 in savings, what rate of return must you earn on that savings to hit your goal?
- You decide to make monthly payments into a retirement fund earning 4.75% compounded monthly. Note: Payments are made at the end of each period.I tried to follow your math from the example problem. When it comes to calculating the future value your math isn't making sense to me. you multiply 120000 x .79649 and get over $400k. What am I missing?!?! Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). You can afford to put $1,100 per quarter into the fund, and you will work for 40 years before retiring. After you retire, you will be paid a quarterly pension based on a 25-year payout. How much will you receive each quarter? (Round your answer to the nearest cent.)In planning for your retirement, you expect to save $500 in year 1, $1500 in year 2, and amounts increasing by $1000 each year through year 20. If your investments earn 10% per year, the amount you will have at the end of year 20 is closest to: O a. $97,974 O b. $225553 C. $659,125 O d. $401387 e. $596236 In enthusiastic new engineering graduate plans to start a consulting firm by borrowing $200,000 at 10% per year interest. The loan payment each year to pay off the loan in 7 years is closest to O a. $41,000 O b. $20540 O c. $35,000 Od. $82,100 e. $75,250
- You just had your 30th birthday and you are planning for your retirement at age 66. You currently have $20,000 in your investment portfolio, and you estimate that you will need at least $1.5 million in order to retire comfortably when you turn 66. What rate of return must be earned on your investment portfolio (assuming that you do not add any more money into the account) for your retirement plan to work? Show me all the calculation processIf you were to invest $50,000 from you lottery winnings today, how much will it be worth in 20 years assuming a 7% rate of return?In order to create an endowment, which pays Rs 500,000 per year, forever, how much money must be set aside today in the rate of interest is 10%? If the first payment of Rs 500,000 will be received after 3 years, what will be present value of such cash payment?