You have just celebrated your twentieth birthday and you believe you will spend Rs 120,000 a year for 20 years once you retire at the age ofsixty. If the interest rate is 10% per annum, how much must you save each year until retirement to support your consumption pattern after retirement? Assume that annual savings start one year from now.

Q: Consider an investment which pays $2,000 at the end of year 1, year 2, and year 3. In year 4, the…

A: Terminal value at end of year 3 = Cash flow in year 4  / (Interest rate - growth rate) = $5000 / (7%…

Q: Your investment advisor wants you to purchase an annuity that will pay you $35,000 per year for 10…

A: An annuity is a series of equal payments. It is a financial instrument that guarantees an income for…

Q: You are looking at an investment that promises to pay $2000 per year forever! What is the value of…

A: A cash flow that goes on forever is called a perpetuity.Here the cash flow of $2000 per year forever…

Q: You have set up a life annuity with a present value of $250,000. If your life expectancy at…

A: Using the PMT function in excel

Q: Suppose you save $75 quarterly for 25 years. If you earn 6% per year on your savings, how much will…

A: The future value is the estimated value of an investment that accounts for compound interest or…

Q: You are saving for retirement. To live comfortably, you decide you will need to save $1,400,000 by…

A: Future Value = fv = $1,400,000Time = t = 48Interest Rate = r = 12%

Q: Suppose you inherit a perpetuity that pays $4,000 each year. Assuming the first payment will occur…

A: The given rate is APR rate i.e. annual percentage rate. The APR is with daily compounding. The EAR…

Q: annually

A: Formula to calculate r: r = (FV/PV)^1/n - 1

Q: You will receive $4,000 three years from now. The discount rate is 10 percent.  a) What is the…

A: In the given question we need to compute the value of investment after two years and one year from…

Q: You estimate that by the time you retire in 35 years, you will have accumulated savings of $3.5…

A: b.) For real expenditure , firstly we will calculate real rate of interest using formula :   Real…

Q: You deposit $100 today, $200 one year from now, and $300 three years from now. How much money will…

A: The concept of the time value of money states that the same amount of money today is worth more than…

Q: An investment opportunity has the following characteristics: payments of $10,000 will be made to you…

A: In order to find the purchase price of investment opportunity the present value of the opportunity…

Q: ou want to have $1,970,000 at the end of 22 years. You have $6,000 to invest now, and you will…

A: Future value includes the amount of deposits made and the amount of compounding interest accumulated…

Q: You just turned 23 years old and want to retire when you turn 65. You expect to live for 25 years…

A: Current Age = 23 Retrement Age = 65 Total Difference(n2) = 65-23 = 42 years Expected to live(n1) =…

Q: You will recieve $4000 three years from now. The discount rate is 10 percent.  c) What is the value…

A: We need use present value formula to solve this problem. Present Value =Future value/(1+r)n Where…

Q: Randy’s, a family-owned restaurant chain operating in Alabama, has grown to the point that expansion…

A: Going public: A well established (private) company which has bright growth prospects can go public…

Q: You have $100 to invest for 1 year at a rate of 10%. Bread sells for $2 today and that means you can…

A: Given information: Nominal rate is 10% Inflation rate is 4% Value of investment is $100 Current…

Q: So you can retire early, you have decided to start saving $500 a month starting one month from now.…

A: Future value (FV) is the value of an investment or cash flow at a specific point in the future,…

Q: You decide to set aside $120 a month for your future. Assuming a real interest rate of 7.5%, how…

A: The question is based on the concept of future value calculation of annuity payment.  Formula as,…

Q: will receive $1000 two years from today, and at the end of each subsequent year, you will receive an…

A: In perpetuity there are payments forever and there is no break of the payments in perpetuity.

Q: You decided to deposit $300 each month starting next month for the next 10 years. If your account…

A: Computation:

Q: You are saving for retirement. To live​ comfortably, you decide you will need to save ​$2,500,000 by…

A: To guarantee financial stability during retirement years is one of the main motivations for saving…

Q: What is the value of today of an investment that will pay $100 per year for 5 years. Assume first…

A: Present value of annuity is the present value of recurring cash flows with regular intervals at a…

Q: ou are offered an investment that requires you to put up $5,000 today in exchange for $12,000 10…

A: Future value is the compounded value of a sum of money invested for a period of time at a specified…

Q: You invest in a project that is expected to pay you $960 every year forever. If the first payment to…

A: We can determine the PV of the cash flow using the formula below:r = discount rate = 3.80% = 0.038

Q: You are saving for retirement. To live comfortably, you decide you will need to save $2 million by…

A: Solution: An equal amount saved each period at beginning of the period is known as annuity due. We…

Q: Assuming an annual rate of return of 9.5% and depositing $3,000 at the end of every 6 months into…

A:

Q: You are saving for retirement. To live comfortably, you decide you will need to save $3 Million by…

A: Annual deposit is calculated using following equation Annual deposit = FV×i[(1+i)n-1]×(1+i) Where,…

Q: How much will you accumulate if you invest $800 a year for 10 years at a rate of 8% per year

A: Annuity refers to a stream of periodic cash flows that are usually constant or fixed. Here the…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.