An individual deposits £10,500 each year into a tax-free savings plan over a 20-year period. The payments are made monthly in arrears during the first 5 years and thereafter quarterly in arrears for the remaining 15 years. The savings plan pays compound interest at the rates of: 6% p.a. nominal convertible monthly for the first 10 years, and • 7.5% p.a. nominal convertible quarterly for the remaining 10 years. (i) Calculate the total amount of fund accumulated in the savings plan at the end of the 20- year period. (ii) At the end of the 20-year period, the individual intends to invest the total savings into a level fixed term annuity product that provides a future retirement income. Calculate the monthly income that the individual can obtain by investing the sum calculated in part (i) into a 25-year term annuity payable monthly in arrears at an effective interest rate of 4.5% p.a.

An individual deposits £10,500 each year into a tax-free savings plan over a 20-year period. The payments are made monthly in arrears during the first 5 years and thereafter quarterly in arrears for the remaining 15 years. The savings plan pays compound interest at the rates of: 6% p.a. nominal convertible monthly for the first 10 years, and • 7.5% p.a. nominal convertible quarterly for the remaining 10 years. (i) Calculate the total amount of fund accumulated in the savings plan at the end of the 20- year period. (ii) At the end of the 20-year period, the individual intends to invest the total savings into a level fixed term annuity product that provides a future retirement income. Calculate the monthly income that the individual can obtain by investing the sum calculated in part (i) into a 25-year term annuity payable monthly in arrears at an effective interest rate of 4.5% p.a.

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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Hi There! I solved the problem, but can you correct my written formula to get a total of $90,691.36 please, the answer I got is italicized and underlined below. Please also answer the questions, and put everything on an excel spreadsheet and show the formulas please for all of the questions below. Thank You! You are offered the opportunity to put some money away for retirement. You will receive 10 annual payments of $5,000 each beginning in 26 years. If you desire an annual interest rate of 12% compounded monthly, answer the following two questions: How much would you be willing to invest today? How much would the money (that you will be willing to invest today) be worth at the end of your last payment (i.e., in year 35)? Amount that you would be willing to invest today = PV = $5,000/(1.01)26*12 + $5,000/(1.101)27*12 + $5,000/(1.01)28*12 + $5,000/(1.01)29*12 + $5,000/(1.01)30*12 + $5,000/(1.01)31*12 + $5,000/(1.01)32*12 + $5,000/(1.01)33*12 + $5,000/(1.01)34*12 +…
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A potential new project involves an up-front (year 0) increase in inventories of $760. In your cash flow table, the cash flow impact of that change in year 0 only should be $__________. Do not round any intermediate work, but round your final answer to 2 decimal places (ex: 12.34567 should be entered as 12.35). Do not enter the $ sign. Include a negative sign if your answer is negative.
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