Table of Future Value Annuity Factors 5% 8% 1.000 1.000 1.000 5.204 5.526 5.867 10.950 12.578 14.487 60.401 120.797 259.052 Year 2% 1 5 10 40 10% 1.000 6.105 15.937 442.580 If he invests the $10,000 today, the terminal value of this initial investment in 40 years (earning an average 10% return) will be s This means that he must accumulate the remaining s through his annual savings plan to obtain the full $600,000. Still assuming an average return on investment of 10%, the additional yearly investment required to reach Ralph's targeted financial goal within 40 years Suppose instead that Ralph had no capital saved and thus needed to accumulate the entire $600,000 in the next 40 years. In this case, his annual contribution would have to be When Ralph starts with an initial investment of $10,000, the total amount that he ends up contributing to accumulate $600,000 is equal to the initial investment plus the additional yearly payments, for a total of When he starts with no initial capital contribution, the amount he ends up contributing is equal to the sum of all annual contributions you calculated in the no-initial-capital scenario, for a total of Once Ralph has determined the annual amount he needs to save, the next step toward achieving his goal is coming up with an investment plan. True or False: The appropriate investment plan depends only on the total amount of money he intends to save, not on the investment objective. O True O False
Table of Future Value Annuity Factors 5% 8% 1.000 1.000 1.000 5.204 5.526 5.867 10.950 12.578 14.487 60.401 120.797 259.052 Year 2% 1 5 10 40 10% 1.000 6.105 15.937 442.580 If he invests the $10,000 today, the terminal value of this initial investment in 40 years (earning an average 10% return) will be s This means that he must accumulate the remaining s through his annual savings plan to obtain the full $600,000. Still assuming an average return on investment of 10%, the additional yearly investment required to reach Ralph's targeted financial goal within 40 years Suppose instead that Ralph had no capital saved and thus needed to accumulate the entire $600,000 in the next 40 years. In this case, his annual contribution would have to be When Ralph starts with an initial investment of $10,000, the total amount that he ends up contributing to accumulate $600,000 is equal to the initial investment plus the additional yearly payments, for a total of When he starts with no initial capital contribution, the amount he ends up contributing is equal to the sum of all annual contributions you calculated in the no-initial-capital scenario, for a total of Once Ralph has determined the annual amount he needs to save, the next step toward achieving his goal is coming up with an investment plan. True or False: The appropriate investment plan depends only on the total amount of money he intends to save, not on the investment objective. O True O False
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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shobha
Transcribed Image Text:Year 2%
1
5
10
40
Table of Future Value Annuity Factors
5%
8%
1.000
1.000
5.526
5.867
12.578
14.487
60.401 120.797 259.052
1.000
5.204
10.950
10%
1.000
6.105
15.937
442.580
If he invests the $10,000 today, the terminal value of this initial investment in 40 years (earning an average 10% return) will be s
This means that he must accumulate the remaining s
through his annual savings plan to obtain the full $600,000. Still assuming an
average return on investment of 10%, the additional yearly investment required to reach Ralph's targeted financial goal within 40 years
Suppose instead that Ralph had no capital saved and thus needed to accumulate the entire $600,000 in the next 40 years. In this case, his
annual contribution would have to be
When Ralph starts with an initial investment of $10,000, the total amount that he ends up contributing to accumulate $600,000 is equal to the
initial investment plus the additional yearly payments, for a total of
When he starts with no initial capital contribution, the
amount he ends up contributing is equal to the sum of all annual contributions you calculated in the no-initial-capital scenario, for a total
of
Once Ralph has determined the annual amount he needs to save, the next step toward achieving his goal is coming up with an investment plan.
True or False: The appropriate investment plan depends only on the total amount of money he intends to save, not on the investment objective.
O True
O False
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