Ms. Early Saver has decided to invest $1,000 at the end of each year for the next 10 years, then she will just let the amount compound for 25 additional years. Her brother, Late Saver, has a different investment program: He will invest nothing for the next 10 years, but will invest $1,000 per year (at the end of each year) for the following 25 years. If we assume a 3% percent rate of return, compounded annually, which investment program will be worth more 35 years  from now? If instead, the assumed interest rate is 8% percent rate which investment program will be worth more in 35 years? Are the results with different interest rates different? Using your results elaborate on the power of compounding and how it impacts savings in the long run.

You are planning for a very early retirement. You would like to retire at age 40 and have enough money saved to be able to withdraw $240,000 per year for the next 40 years (based on family history, you think you will live to age 80). You plan to save by making 20 equal annual installments (from age 20 to age 40) into a fairly risky investment fund that you expect will earn 10% per year. You will leave the money in this fund until it is completely depleted when you are 80 years old. (Click the icon to view Present Value of $1 table.) ( Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. How much money must you accumulate by retirement to make your plan work? (Hint. Find the present value of the $240,000 withdrawals.) (Round your final answer to the nearest whole dollar.) To make the plan work, you must…

Marian Plunket owns her own business and is considering an investment. If she undertakes the​ investment, it will pay $4,880 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,220 plus an additional investment at the end of the second year of $6,100. What is the NPV of this opportunity if the interest rate is 1.8% per​ year? Should Marian take​ it? (yes or no)

Jennifer establishes an investment account to pay for college expenses for her daughter. She plans to invest X at the beginning of each month for the next 20 years. Beginning at the end of the 17th year, she will withdraw 55,000 annually. The final withdrawal at the end of the 20th year will exhaust the account. She anticipates earning an annual effective yield of 11% on the investment. Calculate X. 276.80 307.70 317.60 346.20 349.10