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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USING PRESENT WORTH ANALYSIS AND SHOWING ALL STEPS PARTI A middle age couple has made an agreement with Landscape Forever Company, a gravesite landscaping and
maintenance firm. The agreement states that the company will provide "deluxe" maintenance for the couples selected gravesite forever for an annual fee of $1000. To arrange payment the
couple has set up a variable rate perpetual trust fund with their bank. The bank guarantees that the trust fund will earn a minimum of 5% per year. Assume that the services of Landscape Forever
will not be needed until one of them die, and that they live until the age of 100. What is the minimum amount of money that the couple would have to deposit into the trust fund (ANSWER PART
I is 20000 (P/F, 5%, 49) PART II Suppose that the couple made this minimum deposit at the age of 50, and suppose that the that interest rate changes as follows. Age 50 - 54 5% Age
55-64 10% Age 65-74 15% Age 75 - 84 20% What is the largest sum of money they can withdraw at age 84 and still have money for the landscape?
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Transcribed Image Text:USING PRESENT WORTH ANALYSIS AND SHOWING ALL STEPS PARTI A middle age couple has made an agreement with Landscape Forever Company, a gravesite landscaping and maintenance firm. The agreement states that the company will provide "deluxe" maintenance for the couples selected gravesite forever for an annual fee of $1000. To arrange payment the couple has set up a variable rate perpetual trust fund with their bank. The bank guarantees that the trust fund will earn a minimum of 5% per year. Assume that the services of Landscape Forever will not be needed until one of them die, and that they live until the age of 100. What is the minimum amount of money that the couple would have to deposit into the trust fund (ANSWER PART I is 20000 (P/F, 5%, 49) PART II Suppose that the couple made this minimum deposit at the age of 50, and suppose that the that interest rate changes as follows. Age 50 - 54 5% Age 55-64 10% Age 65-74 15% Age 75 - 84 20% What is the largest sum of money they can withdraw at age 84 and still have money for the landscape?
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