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- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
- You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.To supplement your planned retirement, you estimate that you need to accumulate R 220, 000 in 42 years. You plan to make equal annual end of year deposits into an account paying 8% annual interest. a. How large must the annual deposit be to create the R 220,000 fund in 42 years? b. If you can afford to deposit only R600 per year into the account, how much will you have accumulated by the end of the forty-second year?You have decided you would like to deposit $5,000 into your account today and not touch it until you retire in 45 years. You would like to have accumulated $80,000 at retirement from this deposit if your savings account pays interest quarterly. a)What would your nominal required rate of return (% per annum) be on this deposit? b)What would your effective annual rate of return be on this deposit?
- To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal annual end-of-year deposits into an account paying 8 percent annual interest.a. How large must the annual deposits be to create the $220,000 fund by the end of 42 years?b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the forty-second year?After retirement, you expect to live for 25 years. You would like to have a $95,000 income each year. The annual interest rate is 9 percent per year. Required: Calculate the amount of savings you have in your retirement account to receive this income. A) Assume that the payments start on the day of your retirement. B) Assume that the payments start one year after the retirement.You want to be able to withdraw $40,000 from your account each year for 25 years after you retire. If you expect to retire in 15 years and your account earns 6.6% interest while saving for retirement and 6.2% interest while retired:Round your answers to the nearest cent as needed.a) How much will you need to have when you retire?$b) How much will you need to deposit each month until retirement to achieve your retirement goals?$c) How much did you deposit into you retirement account?$d) How much did you receive in payments during retirement?$e) How much of the money you received was interest?$
- Your retirement account has a current balance of $3, 123. What interest rate would need to be earned in order to accumulate a total of $5,000,000 in 24 years by adding $3,123 annually? Is this possible? Why or why not?To supplement your planned retirement in exactly 30 years, you estimate that you need to accumulate $1 million by the end of 30 years from today. You plan to make equal annual end-of-year deposits into an account paying 4 percent annual interest. a. How large must the annual deposits be to create the $1 million amount by the end of 30 years? b. If you can afford to deposit only $5,000 per year into the account, how much will you have accumulated by the end of the 30 years?For 40 years, you invest $200 per month at an APR of 4.8% compounded monthly, then you retire and plan to live on your retirement nest egg. a) How much is in your account on retirement? b) Suppose you set up your account as a perpetuity on retirement. What will your monthly income be? (Assume that the APR remains at 4.8% compounded monthly.) c) Suppose now you use the balance in your account for a life annuity instead of a perpetuity. If your life expectancy is 21 years, what will your monthly income be? (Again, assume that the APR remains at 4.8% compounded monthly.) d) Compare the total amount you invested with your total return from part c. Assume that you live 21 years after retirement.
