CASE: A 35-year old man is considering a lavish personal pension plan paying 50,000monthly annuities for 5 years that should start when he reaches 55. He makes quarterlydeposits now on the account bearing a constant interest rate of 2.5% per annum for 5-years and plans to place the total balance accrued on time deposit. All interests are at 2.5%per annum except for the time deposit that bears 8.0% annual interest.Questions:1. What is the present value of his pension plan?2. What is the present value of the 5-year quarterly deposits?3. How much is the 5-year quarterly deposits?4. Construct a cash flow diagram for the repayment scheme5. Construct the amortization table for the deposits.

In this we have to find out the present value of all options.

Answered: ASE: A 35-year old man is considering 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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