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amount Sunrise Industries must invest each year

amount Sunrise Industries must invest each year

Essentials Of Investments
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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Sunrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of research, Jill Moran. Ms. Moran will retire in exactly 12 years' time. One year after her retirement she will receive her first annual payment of $42,000. In total, she will receive 20 annual payments. During the 12 year accumulation period, Sunrise wishes to fund the annuity by making equal semi-annual deposits into an account earning an effective 9% retum. The first payment will be made today. On the date of Ms Moran's retirement, Sunrise plans to move the accumulated monies into a safer account eaming an effective 6% per year. Required: Calculate the amount Sunrise Industries must invest each year of the 12 year accumulation period to fully fund Ms. Moran's retirement annuity.
Transcribed Image Text:Sunrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of research, Jill Moran. Ms. Moran will retire in exactly 12 years' time. One year after her retirement she will receive her first annual payment of $42,000. In total, she will receive 20 annual payments. During the 12 year accumulation period, Sunrise wishes to fund the annuity by making equal semi-annual deposits into an account earning an effective 9% retum. The first payment will be made today. On the date of Ms Moran's retirement, Sunrise plans to move the accumulated monies into a safer account eaming an effective 6% per year. Required: Calculate the amount Sunrise Industries must invest each year of the 12 year accumulation period to fully fund Ms. Moran's retirement annuity.
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