8. John's current income is $68,000 per year, and he is planning to retire 20 years from now. John expects that his annual income will increase by $2,900 each year. (That is, in the first year he will earn $68,000, in the second year $70,900, in the third year $73,800, and so on.) John plans to deposit only 4% of his annual income into a retirement fund that earns 6% interest compounded daily (365 days in a year). What will be the amount accumulated at the time he retires? Annual effective interest rate is %. (Round to four decimal places.) When Joe retires, the amount accmulated will be $ (Round to the nearest dollar.)
8. John's current income is $68,000 per year, and he is planning to retire 20 years from now. John expects that his annual income will increase by $2,900 each year. (That is, in the first year he will earn $68,000, in the second year $70,900, in the third year $73,800, and so on.) John plans to deposit only 4% of his annual income into a retirement fund that earns 6% interest compounded daily (365 days in a year). What will be the amount accumulated at the time he retires? Annual effective interest rate is %. (Round to four decimal places.) When Joe retires, the amount accmulated will be $ (Round to the nearest dollar.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:8. John's current income is $68,000 per year, and he is planning to retire 20 years from now. John expects that his annual
income will increase by $2,900 each year. (That is, in the first vear he will earn $68,000, in the second year $70,900, in the
third year $73,800, and so on.) John plans to deposit only 4% of his annual income into a retirement fund that earns 6%
interest compounded daily (365 days in a year). What will be the amount accumulated at the time he retires?
Annual effective interest rate is
%. (Round to four decimal places.)
When Joe retires, the amount accmulated will be $
(Round to the nearest dollar.)
9. Assume you apply for an MBA loan of $14,000 with an interest rate of 12% compounded monthly. You will pay off the loan
over 42 months with equal monthly payments.
(a) The monthly interest rate is
%. (Round to three decimal places.)
(b) The amount of the equal monthly payment is $
.(Round to the nearest cent.)
(c) The interest payment for the 20th payment is $
(Round to the nearest cent.)
(d) The total interest paid over the life of the loan is $
(Round to the nearest dollar.)
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