Mary is now 40 years of age and makes $40,000 a year. She expects her income to increase 2% over inflation. She wants to accumulate $500,000 in real terms to retire at age 70.
What fraction of her income does she need to set aside? Assume her retirement funds expected real return of 5% p.a. Ignore taxes.
Thanks so much, I was trying the question and got stuck :/
You have just made your first $4,000 annual contribution to your 401-k account. Assuming you earn 8% on your money and invest for 30 years (twenty annual $4,000 contributions), to what value will your account grow after thirty years?
S = future value
R = periodic payment
i = interest rate
n = number of periods (in this case-years)
S or the future value of you annuity equals:
Find the present value of the annuity if the withdrawl is to be $100.00 per month for 9 months at 12% compounded.
Increasing the number of periods will increase all of the following except
a. the present value of an annuity.
b. the present value of $1.
c. the future value of $1.
d. the future value of an annuity.
4. I intend to set up an annuity for 25 years with payments of $250 invested at the end of each month. Interest at 3.75% will be compounded monthly. What will the value of the annuity be after 25 years?
5. A company has researched their market and found that they can market as many items at $2.50 each as they can produce in a day. If the Cost is C=$1.80x + $210, find the break even point
Calculate the future value of the following:
o $5,000 compounded annually at 6% for 5 years
o $5,000 compounded semiannually at 6% for 5 years
o $5,000 compounded quarterly at 6% for 5 years
o $5,000 compounded annually at 6% for 6 years
Answer the following: What conclusions can be drawn about the frequency of compounding interest? What conclusions can be drawn about the length of time an amount is compounding?
Calculate the present value of the following:
o $7,000 in 5 years at an annual discount rate of 6%
o $7,000 in 5 years at a semiannual discount rate of 6%
o $7,000 in 5 years at a quarterly discount rate of 6%
o $7,000 in 6 years at an annual discount rate of 6%
Answer the following: What conclusions can be drawn about the frequency of the discounting interval? What conclusions can be drawn about the length of time until the receipt of that value?
Answer the following: Assume you have a choice between two annuity contracts. Contract A pays $5,000 per year for 5 years starting one year from today. Contract B pays $5,000 per year for 5 years starting today. The discount rate for each is 6%. Which annuity contract would you choose for your retirement? Why?
Please, Please help.
1.Capstone Checkpoint: Present Value, Future Value, and Annuity Due – Due Day 5
·Complete the following problems (Do Not repeat the questions):
Prob. 1: What is the present value of:
a.$4,000 in 7 years at 8 percent?
b.$25,000 in 5 years at 10 percent?
c.$10,000 in 25 years at 6 percent?
d.$1,000 in 20 years at 18 percent?
Prob. 2: If you invest 5,000 today, how much will you have:
a.In 5 years at 9 percent?
b.In 8 years at 12 percent?
c.In 30 years at 14 percent?
d.In 25 years at 20 percent (compounded semiannually)?
Pristine product is considering the purchase of a new machine. The estimated cost of the machine is $25,000. The machine is expected to generate annual cash inflows for the next four years as follows:
Year 1 = $15,000 annual cash flow
Year 2 = $10,000 annual cash flow
Year 3 = $5,000 annual cash flow
The machine is not expected to have a residual value at the end of its useful life. The company uses a discount rate of 10%. Relevant interest factors for 10% single sum and annuity amounts are:
//////// Single Sum //////// Annuity
N=1 __ .9091 ————– .9091
N=2 __ .8264 —————- 1.7355
N=3 __ .7513 ————– 2.4869
What is the expected net present value for the machine?
a.$657
b.$2,273
c.$(4.343)
d.$18,426
You will be guaranteed a regular income if you purchase this______.
Should investment or annuity go there?
Please and thank you 
HOW WOULD I DO THIS ON A SPREADSHEET
Option 1 Invest $5,000 in a savings account at 6.6% interest compounded monthly.
Option 2 Invest into an ordinary annuity where $1,100 is deposited each year into an account that earns 4.8% interest compounded annually.
SPREADSHEET:
Set up the formula for compound interest for Option 1 and the formula for Future Value of an Annuity for Option 2 in an Excel spreadsheet to calculate the amount earned at the end of 6 years. Be sure to label all variables in your spreadsheet.
I really need help this. If anybody can help respond here are email me mpitts1947@yahoo.com
Option 1 Invest $5,000 in a savings account at 6.6% interest compounded monthly.
Option 2 Invest into an ordinary annuity where $1,100 is deposited each year into an account that earns 4.8% interest compounded annually.
SPREADSHEET:
Set up the formula for compound interest for Option 1 and the formula for Future Value of an Annuity for Option 2 in an Excel spreadsheet to calculate the amount earned at the end of 6 years. Be sure to label all variables in your spreadsheet.
YOU DONT HAVE TO GIVE ME THE ANSWER BUT PLEASE START ME OFF
On January 15, 2010, Dolan Corp. adopted a plan to accumulate funds for environmental improvements beginning July 1, 2014, at an estimated cost of $4,000,000. Dolan plans to make four equal annual deposits in a fund that will earn interest at 10% compounded annually. The first deposit was made on July 1, 2010. Future value factors are as follows:
Future value of 1 at 10% for 5 periods 1.61
Future value of ordinary annuity of 1 at 10% for 4 periods 4.64
Future value of annuity due of 1 at 10% for 4 periods 5.11
Dolan should make four annual deposits of
As the title says, I’m considering opening an IRA through USAA. The thing is that I’m not to hip to all the lingo that I’m seeing, i.e. Roth, Traditional, Mutual Funds, Stocks, Bonds, Annuities, etc…. Is there a website where I can go to become better informed on these things and on IRAs in general before I dive in? Thanks?
1).If you depoist money today into an account that pays 6.5 percent interest, how long will it take for you to double your money?
2). John Roberts has $42,180.53 in a brokerage account, and he plans to contrribute an additional $5,000 to the account at the end of every year. The brokerage account has an expercted annual return of 12 percent. If John’s goal is to accumulate $250,000 in the account, how many years will it take for John to reach his goal?
3). What is the future value of a 5-year ordinary annuity that promises to pay you $300 each year? The rate of interest is 7 percent.
4). What is the future value of a 5 year annuity due that promises to pay you $300 each year? Asume that all payments are reinvested at 7 percent a year, until Year 5.
i need help with my accounting homework,
which of the following affects the present value of an investment.
a the interest rate
b. the number of time periods (length of the investment)
c. the type of investment (annuity versus lump sum)
d. all of the above.
All else being equal, a company would choose to invest in a capital asset if which of the following is true.
a. if the payback period equals the amount invested
b. if the expected accounting rate of return is less than the required rate of return
c. if the average amount invested is equal to the net cash inflows
d. if the expected accounting rate of return is greater than the required rate of return.
which of the following statements regarding the budgeting process is true.
a. the budget should be designed from the bottom up, with input from employees at all levels
b. the budget should be approved by the company’s external auditors.
c. the budget should always be designed by top corporate management
d. all of the above statements are true regarding the budgeting process.
which of the following is a benefit of budgeting ?
a. focuses management’s attention on the future
b.improved decision-making processes
c. improved motivation by employees
d. all of the above
which of the following is an advantage of the budgeting process?
a. aids in performance evaluation
b. coordinates the activities of the organization
c. assures the company will achieve its objectives
d. both a and b