Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Please answer #9-#13

**Saving Early Plan 2:**

Invest $350 at the end of each month into an account paying 7.5% compounded monthly for 15 years, then leave the money in the account earning interest until retirement (making no additional withdrawals or investments until retirement).

**Using the assumptions above, write down your answer to each of the following questions:**

6. **Create the following table of values for this investment plan, Saving Early Plan 2,** (the table should be handwritten) to find the amount available after 15 years. Write N/A next to any variable that does not apply and write Solve next to the appropriate variable.

   | P =     | r =    |
   |--------|--------|
   | A =    | t =    |
   | M =    | n =    |

7. **Indicate the best formula to use to compute the amount available after 15 years.**

8. **Substitute the values into the formula and compute how much money will be available after 15 years.**

9. **Now create the following table of values for this investment plan, Saving Early Plan 2,** (the table should be handwritten) to find the amount available at retirement. Write N/A next to any variable that does not apply and write Solve next to the appropriate variable.

   | P =     | r =    |
   |--------|--------|
   | A =    | t =    |
   | M =    | n =    |

10. **Indicate the best formula to use to compute the amount available at retirement.**

11. **Substitute the values into the formula and compute how much money will be available at retirement.**

12. **Compute the total amount of money you paid into the retirement account over the 45 years from the time you started saving, and**

13. **Compute the total amount of interest earned over the entire 45 years of saving.**

(Note: There are tables where variables such as P (principal), r (interest rate), A (amount), t (time), M (monthly investment), and n (number of compounding periods) need to be filled in. The appropriate formula for calculating the future values of annuities should be used for computations.)
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Transcribed Image Text:**Saving Early Plan 2:** Invest $350 at the end of each month into an account paying 7.5% compounded monthly for 15 years, then leave the money in the account earning interest until retirement (making no additional withdrawals or investments until retirement). **Using the assumptions above, write down your answer to each of the following questions:** 6. **Create the following table of values for this investment plan, Saving Early Plan 2,** (the table should be handwritten) to find the amount available after 15 years. Write N/A next to any variable that does not apply and write Solve next to the appropriate variable. | P = | r = | |--------|--------| | A = | t = | | M = | n = | 7. **Indicate the best formula to use to compute the amount available after 15 years.** 8. **Substitute the values into the formula and compute how much money will be available after 15 years.** 9. **Now create the following table of values for this investment plan, Saving Early Plan 2,** (the table should be handwritten) to find the amount available at retirement. Write N/A next to any variable that does not apply and write Solve next to the appropriate variable. | P = | r = | |--------|--------| | A = | t = | | M = | n = | 10. **Indicate the best formula to use to compute the amount available at retirement.** 11. **Substitute the values into the formula and compute how much money will be available at retirement.** 12. **Compute the total amount of money you paid into the retirement account over the 45 years from the time you started saving, and** 13. **Compute the total amount of interest earned over the entire 45 years of saving.** (Note: There are tables where variables such as P (principal), r (interest rate), A (amount), t (time), M (monthly investment), and n (number of compounding periods) need to be filled in. The appropriate formula for calculating the future values of annuities should be used for computations.)
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