Find the FUTURE VALUE of both options below, showing all MANUAL workings using the formula Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each year for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?
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Timothy is retiring from his job soon at which time his employer will make the following offer:
- A lump sum amount of $200,000
- A sum of $15,000 at the beginning of each year for the next 25 years.
If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?
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- A) Your client is evaluating between the following two retirement options: Option 1: Pays a lump sum of $3.5 million in 6 years. Option 2: A 25-year annuity at $180,000 per year starting today. If your client’s required rate of return is 6 percent per year, discuss the option she must choose based on a higher present value? B) Neal plans to buy a car worth $42,000 today. He is required to pay 15 percent as a down payment and the remainder is to be paid as a monthly payment over the next 12 months with the first payment due at t = 1. Given that the interest rate is 8% per annum compounded monthly, compute the approximate monthly payment. Discuss the impact of increase in interest rate on the monthly payment.All computations must be done and shown manually. Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each month for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose? Question 2 You are contemplating investing some surplus funds and the following options are available: Invest $50,000 @ 4% p.a. compounded annually for 5 years. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. Invest $40,000 @ 4.5% p.a. compounded semi-annually for 5 years. Invest $50,000 @ 3% p.a. compounded semi-annually for 5 years. Invest $55,000 @ 0.5% p.a. compounded weekly for 5 years Which one of the above is the second-best option? Question 3 You have 20 years left for your retirement. You wish to accumulate a sum large enough by that time which will allow you an annual withdrawal of $100,000 every year…Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each month for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose? You are contemplating investing some surplus funds and the following options are available: Invest $50,000 @ 4% p.a. compounded annually for 5 years. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. Invest $40,000 @4.5% p.a. compounded Semi-annually for 5 years. Invest $50,000 @ 3% p.a. compounded Semi-annually for 5 years. Invest $55,000@ 0.5% p.a compounded weekly for 5 years. Which one of the above is the Second-best option?
- marian plunket owners her own business and is considering an investment. If she undertakes the investment, it will pay $32,000 at the end of each of the next 3 years. The opportunity requires an initial investment of $8,000 plus an additional investment at the end of the second year of $40,000. What is the NPV of this opportunity if the interest rate is 8% per year? Should marian take it?Gabriel plans to retire when he has $1,500,000 in his bank account, and he does not want to work more than 30 years. If this account has a APR of 5.4%, determine the minimum monthly annuity payment he would need to make. Round your answer to the nearest dollar.Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,600 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,150 plus an additional investment at the end of the second year of $5,750. What is the NPV of this opportunity if the interest rate is 1.9%per year? Should Marian take it? What is the NPV of this opportunity if the interest rate is per year?
- You and your wife are making plans for retirement. You plan on living 25 years after you retire and would like to have $75,000 annually on which to live. Your first withdrawal will be made one year after you retire and you anticipate that your retirement account will earn 15% annually. What amount do you need in your retirement account the day you retire? Do not round intermediate calculations. Round your answer to the nearest cent.$ Assume that your first withdrawal will be made the day you retire. Under this assumption, what amount do you now need in your retirement account the day you retire? Do not round intermediate calculations. Round your answer to the nearest cent.$Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $5,440 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,360 plus an additional investment at the end of the second year of $6,800. What is the NPV of this opportunity if the interest rate is 1.6% per year? Should Marian take it?Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,680 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,170 plus an additional investment at the end of the second year of $5,850. What is the NPV of this opportunity if the interest rate is 2.3% per year? Should Marian take it? What is the NPV of this opportunity if the interest rate is 2.3% per year? The NPV of this opportunity is $. (Round to the nearest cent.)
- A couple will retire in 50 years; they plan to spend about $26,000 a year (in current dollars) in retirement, which should last about 25 years. They believe that they can earn a real interest rate of 9% on retirement savings. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $56,000 on their child’s college education?ou decide to replace your income of $70,000 a year in retirement for 30 years. How much do you need in your retirement account the day you retire to make that happen, assuming a real interest rate of 3%?A couple will retire in 40 years; they plan to spend about $27,000 a year in retirement, which should last about 20 years. They believe that they can earn 7% interest on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. b. How would the answer to part (a) change if the couple also realize that in 15 years they will need to spend $57,000 on their child’s college education?