JOTARO started saving $2,000 each year for 25 years until his retirement at 65 years old. A year after he retired, he withdrew $10,000 for a period of 5 years. In the ninth and tenth years, he decided to only withdrew $5,000 per year. In the twelfth year, he withdraws the remaining money in his account. If the interest rate was 9% per year: a) Draw the Cash flow diagram with function symbols. b) What was the final withdrawal from his account? SHOW COMPLETE SOLUTIONS

JOTARO started saving $2,000 each year for 25 years until his retirement at 65 years old. A year after he retired, he withdrew $10,000 for a period of 5 years. In the ninth and tenth years, he decided to only withdrew $5,000 per year. In the twelfth year, he withdraws the remaining money in his account. If the interest rate was 9% per year: a) Draw the Cash flow diagram with function symbols. b) What was the final withdrawal from his account? SHOW COMPLETE SOLUTIONS

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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(Please include a cash flow diagram) A teacher is interested to open investments account at an interest rate of 12% compounded semiannually. The scheme allows for the investor to withdraw a certain annuity for the first 3 years. This annuity increases by a factor of 1.5 for the next three years and becomes twice the initial annuity thereafter. If he wants to withdraw a perpetuity of $65,000, how much should he deposit?
A saver plans to make 25 deposits of 100 at the end of each year. If the interest rate were 6% effective per annum, he would accumulate a fund of amount F on the date of the last payment. The saver makes the first 10 deposits of 100. However, the account only credits an effective annual interest rate of 5%. Therefore, the saver determines that he must increase each of the remaining 15 deposits to X so that he can accumulate the desired fund of F. Assuming that the fund continues to earn 5% effective annual interest, find X.
Michael has a bank account that is worth $80,550. (a) Find the overall ROR if he had deposited $50,000 five years ago and left it undisturbed until now ? (b) Find the real ROR If the inflation over that period was 4% per year ? (c) What is the buying power of his money now compared to the buying power 5 years ago ?
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?
David Quincy wants to withdraw $30,800 each year for 10 years from a fund that earns 10% interest. Click here to view factor tables. How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.) First withdrawal at year-end First withdrawal immediately
At the end of each of the next 8 years, you planto put $25,000 of your annual salary in thebank. If the annual interest rate is 3%, what isthe present value of this planned savingsstream? What will the balance in your bankaccount be at the end of the 8 year period?
Troy will receive $9486 at the end of Year 2. At the end of the following two years, he will receive $7971 and $2238, respectively. What is the future value of these cash flows at the end of Year 6 if the interest rate is 4 percent?
A financial adviser is reviewing one of her client's accounts. The client has been investing $1,000 at the end of every quarter for the past II years in a fund that has averaged 7.3% compounded quarterly. Using a cash flow diagram, how much money does the client have in his account?
You want to be able to withdraw $25,000 each year for 20 years. Your account earns 10% interest. A.How much do you need in your account at the beginning? b) How much total money will you pull out of the account? c) How much of that money is interest?
1. Engr. Johnson started saving ₱2000.00 each year for 25 years until his retirement at 65 years old. A year after he retired, he withdrew ₱10000.00 for a period of 5 years. In the ninth and tenth years, he decided to only withdrew ₱5000.00 per year. In the twelfth year, he withdraws the remaining money in his account. If the interest rate was 9% per year: a) Draw the Cash flow diagram with function symbols. b) What was the final withdrawal from his account?
engineering economics John bought a car worth $ 100,000 if paid in cash. If paid on installment basis, he will pay $ 20,000 downpayment, $ 30,000 at the end of one year; $40,000 at the end of three years and a final payment at the end of five years. Interest rate is 20% compounded annually. a) Construct the cash flow diagram if paid on installment basis: b) What will be the amount of the final payment?
Your uncle has $260,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, starting at the end of this year. He also wants to have $25,000 left to give you when he ceases to withdraw funds from the account. For how many years can he make the $35,000 withdrawals and still have $25,000 left in the end? O a. 6.71 years O b. 11.98 years Oc. 9.39 years Od. 11.26 years Oe. 10.50 years

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