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- Multiperiod Consumption-Saving Plan Assume a person is 35 years old and plans to retire at age 65. So s/he has 30 more years to work. Assume the following additional information apply: Annual (real) income = $40,000 Real interest rate = 5% Expected live after retirement = 20 years Desired retirement income = 75% of pre-retirement income = $30,000 Prepare lifetime consumption-savings schedule for the person. First calculate how much s/he should have at retirement in order to consume $30,000 per year for 20 more years. This is the PV of annuity of $30,000 over 20 years at interest rate of 5%. 30,000* (PVIFAs°20) = $373,866.31. This amount is also equal to the future value of what s/he should save over her/his remaining 30 working years. (Annual saving)* (FVIFAS9,30) = $373,866.31. Solve for annual saving and you will get $5,627.22.A businessman expects to receive P20, 000.00 in 10 years. How much is that money worth now considering interest at 6% at compounded quarterly a.P11, 085.25 b.P11, 725.25 c.P13, 025.25 d.P11, 025.25Mf2. An investment promises to quadruple your money in six years. If the interest is compounded monthly, what effective annual rate would you earn? A. 31.95% B. 25.99% C. 18.92% D. 21.90% E. 41.42% F. 16.65%
- What is the accumulated value at the end of 10 years if P1k is invested at 12% compounded continuously. a. P10,127.497 b. P10,320.197 c. P3320.117 d. P3230.01A $1000 face-value coupon bond has a current yield of 5.75% and a market price of $1060. What is the bond’s coupon rate?Suppose you purchased a corporate bond with a 10-year maturity. a $1,000par value, a 10% coupon rate, and semiannual interest payments. What all this means that you receive $50 interest payment at the end of each six-month period for 10 years (20 times). Then, when the bond matures, you will receive the principal amount (the face value) in a lump sum. Three years after the bonds were purchased, the going rate of interest (coupon rate) on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (3 years after the purchase)?
- Current maintenance cost of a certain machine is P1,200 and increases by 250 each year for the next 10 years. If interest is 8% what present sum of money is necessary to be set aside now to pay for the maintenance cost for the next 10 years. a. P14,546.306 b. P16,546.306 c. P15,446.306 d. P14,456.306If a credit card pays 5% interest compounded quarterly, what is the effective annual interest rate? Oa. 6% Ob.5% Oc 5.4% Od.5.09%9 A one-year investment has quarterly returns of 2.0% in Q1, -15.6% in Q2, 13.7% in Q3 and 9.1% in Q4. What is its total annual return (i.e., its compound annual growth rate or CAGR)? Give your answer in percent using two decimals (e.g., for 12.346% write 12.35).
- Sheena bought a laptop at P120,000 if paid in cash. The laptop may also be purchased by installment to be paid within 5 years. If money is worth 8%, determine the amount of each annual payment if all payments are made at the beginning of the year. A. P30,054.77 B. P31,985.57 C. P29,985.59 D. P27,828.49A sum of $1,000 is invested now by Kenneth and left for 8 years at which time the principal is withdrawn The interest that has accrued is left for another 8 years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of 16th year? A. $ 1,985.57B. $ 1025,41C. $ 705.42D. $ 512.61N 1. You need $3,000 to buy a new stereo for your car in 3 years. What value you must have now if the compounded annually return is 10%. 2. Your grandfather placed $5,000 in a trust fund for you. In 12 years what will be the worth of the savings. If the estimated rate of return on the trust fund is 8%?+