Suppose Mr. Ali wish to retire thirty years from today. He has just recieved a lump-sum amount of $30000 from inheritance, he expect that he may need $50000 on the marriage of his daughter 20 years from today. He determines that he needs $15000 per year once he retires, with the first retirement funds withdrawn one year from the day he retires. He estimates that he will earn 10% per year on the retirement funds and that he will need funds up to and including in his 20th birthday after retirement. a) how much he needs to deposit an account today so that he has enough funds to meet all his future expenditures? b) how much he needs to deposit each year in an account, starting one year from today, so that he may have enough funds to meet all his future requirements? c) suppose that an investment promises to pay a nominal 11.6 percent annual rate of interest. What is the effective annual interest rate on this investment assuming that interest is compounding (a) annually? (b) semi annually? (c) quarterly? (d) monthly? (e) daily (365 days)?
Suppose Mr. Ali wish to retire thirty years from today. He has just recieved a lump-sum amount of $30000 from inheritance, he expect that he may need $50000 on the marriage of his daughter 20 years from today. He determines that he needs $15000 per year once he retires, with the first retirement funds withdrawn one year from the day he retires. He estimates that he will earn 10% per year on the retirement funds and that he will need funds up to and including in his 20th birthday after retirement.
a) how much he needs to deposit an account today so that he has enough funds to meet all his future expenditures?
b) how much he needs to deposit each year in an account, starting one year from today, so that he may have enough funds to meet all his future requirements?
c) suppose that an investment promises to pay a nominal 11.6 percent annual rate of interest. What is the effective annual interest rate on this investment assuming that interest is compounding (a) annually? (b) semi annually? (c) quarterly? (d) monthly? (e) daily (365 days)?
Step by step
Solved in 2 steps with 2 images
