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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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. 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 2012 the maximum Social Security deposit by an individual was $8,386.75. Suppose you are 27 and make a deposit of this amount into an account at the end of each year. How much would you have (to the nearest dollar) when you retire if the account pays 2% compounded annually and you retire at age 65?_____$
How much would you be willing to spend for an annuity that pays $2,500 at the end of each year for three years, assuming you could earn 5.5% on other LIET similar investments? Select one: O a. $5,494 O b. $4,783 O c. $6,087 O d. $6,408 O e. $6,745 ہے
An investor expects to receive Rs 5,72,750, at the end of 20 years to keep his retirement life happy. Discuss how much money he should invest in lump sum to meet his expectation at the given prevailing interest rate of 10% per annum
1. Mr COVID is 40 years old and is planning to accumulate 10 million pesos on the day of his retirement, at 60. From this retirement fund, he is going to draw a monthly pension, the first of which to be drawn one year after his retirement day, continuing until he is 90 years old. a. What should the monthly withdrawal be assuming interest at 12% pa compounded monthly. Show the cash flow diagram. b. What must his annual deposit be in order to finance his pension plan if the first deposit is made on his 42nd birthday, continuing it until his retirement day?
An investor wants to save money to purchase real estate. He deposits $550 at the end of each year in an ordinary annuity that pays 4% interest, compounded annually. Answer each part. Do not round any intermediate computations nor answers. If necessary, refer to the list of financial formulas. (a) Find the total value of the annuity at the end of the 1 year. st 24 (b) Find the total value of the annuity at the end of the 2 nd year. (c) Find the total value of the annuity at the end of the 3 rd year.
B7
please show all work and state answer clearly
You MUST use the TI BA II calculator features (N, I/Y, PV, PMT, FV, AMORT) to solve questions whenever possible. 1. Seanna O'Brien receives pension payments of $3,200 at the end of every six months from a retirement fund of $50,000. The fund earns 7% compounded semi-annually. What is the size of the final pension payment? 2. For how many years will Prasad make payments on the $28,000 he borrowed to start his machine shop if he makes payments of $3,400 at the end of every three months and interest is 8.08% compounded semi-annually?
Gustav desires to deposit with a Trust Company a sum just sufficient to provide his family with an annuity of $600 per month for twenty-four years. How much he deposit if the Trust Company agrees to accumulate interest at the rate of 6% payable monthly? show solution
Your rich uncle named you beneficiary of his life insurance policy. The insurance company gives you a choice of 100,000 today of a 12-year annuity of P12, 000 at the end of each year. What rate of return is the insurance company offering?
Ozzy is working a tire factory that offers a pension in the form of an annuity that pays 5.5% interest compounded annualy. he wants to work for 30 years and then have a retirement income of $48000 at the end of the each year forever. his employer decides to make annual deposit starting one year from now, with a first payment of $K and then followed by subsequent deposits that decreases by $250 anuaaly into the pension fund. Calculate the value of K

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