llustration 10-1 Compound Interest FormulasFormulaIf periodic payment is made atthe beginning of each periodWhen to useNeed to know FV; know PVFV = PV(1 + i)IANot applicable.PVNeed to know FV; know PMTMultiply the result by (1 + i).(1 + i) -FV = PMTIBPMT PMT PMT PMTРМТ РМТ РМТ РМТNeed to know PV; know FVPV =FV2ANot applicable.(1 + i)FVMultiply the result by (1 + i).PMT PMT PMT PMTNeed to know PV; know PMTPMT PMT PMT PMT2BPV = PMT(1 + i)"?Need to know interest rate; know PVand FVFV- 1i = ?Not applicable.i =FVPVDivide the result by (1 + i).Need to know PMT; know FVFV(i)4APMT =FV(1 + i)" - 1FVDivide the result by (1 + i).Need to know PMT; know PVPV(i)4BPMTPV1-(1 + i)"PVNeed to know n; know at least two of thesevariables: PV, FV, PMTPV + (1 + i) (PMT)- In(PMI)(1 + i) (PMT) - FVPV +- InPMT -FV5*n= ?n =In(1 + i)n =In(1 + i)esent value; FV = future value: PMT = periodic payment; i = interest rate per period, expressed in decimal form; n = total number of periods. Theymbol In stands for natural logarithm.Dona S is a comprehensive formula that covers quite a few situations. For this formula, use proper sign convention for PV, FV, and PMT. Think of thePV Charles wants to retire in 18 years. At that time he wants tobe able to withdraw $22,000 at the end of each year for 18years. Assume that money can be deposited at 6% per yearcompounded annually. What exact amount will Charlesneed to deposit today to have enough to cover hisretirement?Show the use of the appropriate formula by indicating theuse of the information into the formula.

The present value would be considered as the one under which all those values which are going to…

Charles wants to retire in 18 years. At that time he wants to be able to withdraw $22,000 at the end of each year for 18 years. Assume that money can be deposited at 6% per year compounded annually. What exact amount will Charles need to deposit today to have enough to cover his retirement? Show the use of the appropriate formula by indicating the use of the information into the formula.

Charles wants to retire in 18 years. At that time he wants to be able to withdraw $22,000 at the end of each year for 18 years. Assume that money can be deposited at 6% per year compounded annually. What exact amount will Charles need to deposit today to have enough to cover his retirement? Show the use of the appropriate formula by indicating the use of the information into the formula.

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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You want to retire at age 65. You decide to make a deposit to yourself at the end of each year into an account paying 3%, compounded annually. Assuming you are now 25 and can spare $1,400 per year, how much will you have when you retire at age 65? (Round your answer to the nearest cent.)_____$
John Rider wants to accumulate $100,000 to be used for his daughter’s college education. He would like to have the amount available on December 31, 2026. Assume that the funds will accumulate in a certificate of deposit paying 8% interest compounded annually.Required:Answer each of the following independent questions.1. If John were to deposit a single amount, how much would he have to invest on December 31, 2021?2. If John were to make five equal deposits on each December 31, beginning on December 31, 2022, what is the required amount of each deposit?3. If John were to make five equal deposits on each December 31, beginning on December 31, 2021, what is the required amount of each deposit?
Suppose a woman has decided to retire as soon as she has saved $800,000. Her plan is to put $950 each month into an ordinary annuity that pays an annual interest rate of 2.4%. In how many years will she be able to retire? She will be able to retire in approximately years. (Round to the nearest year as needed.) Enter your answer in the answer box and then click Check Answer. All parts showing Clear All Check Answer To see what to study next, go to your Study Plan. 99+ a 近
Mrs. Crawford will receive $9,250 a year for the next 14 years from her trust. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.If a 8 percent interest rate is applied, what is the current value of the future payments? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Daryl wishes to save money to provide for his retirement. He is now 30 years old and will be retiring at age 64. Beginning one month from now, he will begin depositing a fixed amount into a retirement savings account that will earn 12% compounded monthly. Then one year after making his final deposit, he will withdraw $100,000 annually for 25 years. In addition, and after he passes away (assuming he lives 25 years after retirement) he wishes to leave in the fund a sum worth $1,000,000 to his nephew who is under his charge. The fund will continue to earn 12% compounded monthly. How much should the monthly deposits be for his retirement plan?
A woman is planning for retirement in 30 years and decides she can deposit $6,000 each year on December 31 into a retirement savings plan that she expects will pay 6% interest. In 20 years she also expects to receive a small inheritance of $12,000 that she can also put into her retirement fund. The woman anticipates that her retirement fund will need to last 20 years; she estimates that she will need $60,000 at the end of each year in retirement to cover her living expenses. Her plan is flawed. How much extra does she need to save every year (rounded to dollars and cents) to achieve her goals? (Do not round interim calculations)
To help out with her retirement savings, Linda invests in an ordinary annuity that earns 6.6% interest, compounded annually. Payments will be made at the end of each year. Continue How much money does she need to pay into the annuity each year for the annuity to have a total value of $97,000 after 17 years? Do not round intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas. 50°F Mostly cloudy Es O 2 2 W 0 3 E 4 X R O S F6 % 5 € T Y F8 & 7 a 7 U 27 D * 00 Submit Assignmen 2022 McGraw Hill LLC. All Rights Reserved. Terms of Use | Privacy Center | Accessibility F10 D X I 9 2 F11 PDF F12 NumLk Prt Sc ^ Pause Br +
C. Fred is planning on retiring this year. How much must his retirement account have in it this year in order to make a $40,000 payment each year for the next 30 years to meet his needs assuming that the appropriate interest rate is 8%?*
Marco is plans to retire in 18 years. He wants you to assume he will be retired for 15 years before he dies. You calculated that Marco needs $1,760,621 as a lump sum at the beginning of retirement. Use an investment return of 5 percent and an inflation assumption of 3.3 percent. How much money will he need to save monthly to have this amount when he begins retirement? (Round the final answer to 2 decimal places)
20.
For planning purposes, an individual wants to be able to spend $90,000 per year, at the end of each year, for an anticipated 30 years in retirement. In order to fund this retirement account, he plan to make annual deposits for 20 years at the end of his each working year. What is the amount he need deposit each year to fund his desired retirement spending? Use 10% as an annual simple rate for all calculations.
Jonathan is planning to retire on January 1, 2024. his goal is to have enough money in his savings account to be able to withdraw $2,000 per month beginning one month after retirement and continuing for 25 years after retirement. He earns an annual effective rate of interest of 10% on his account. Determine the minimum amount needed in his savings account on January 1, 2024, to accomplish his goal. Possible Answers $235,000 but $255,000

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