Krista Lee can purchase a service contract for all of her major appliances for $190 a year. If the appliances are expected to last for 16 years and she earns 6 percent on her savings, what would be the future value of the amount Krista will pay for the service contract? (Exhibit 1-A, Exhibit 1-B, Exhibit 1-C, Exhibit 1-D) Note: Use appropriate factor(s) from the tables provided. Round time value factor to 3 decimal places and final answer to 2 decimal places. Future value

Krista Lee can purchase a service contract for all of her major appliances for $190 a year. If the appliances are expected to last for 16 years and she earns 6 percent on her savings, what would be the future value of the amount Krista will pay for the service contract? (Exhibit 1-A, Exhibit 1-B, Exhibit 1-C, Exhibit 1-D) Note: Use appropriate factor(s) from the tables provided. Round time value factor to 3 decimal places and final answer to 2 decimal places. Future value

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter2: Using Financial Statements And Budgets

Section: Chapter Questions

Problem 5FPE

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Question #4: Suppose you have just started 21st year of your life, you plan to retire at the end of age 65, and you expect to live until the end of 90 (working for 45 full years and being retired for 25 years). You currently have a constant earning of $50,000 per year (paid at the end of the year). The plan is to save 10% of your income each year to meet your retirement needs. Assume the valuation rate of 7%. Part A: If you want to keep a constant level of consumption during your retirement, how much you can consume per year when you are retired? Part B: Imagine you decide to save 20% of your salary. How many years earlier you can retire having the same level of consumption as Part A during your retirement?Hint: (1+?)?−90=(1+?)?−20(1+?)70=(1+?)?(1+?)90
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