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18 Apr 2019

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I was able to get the formulas but I can't find the answers

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Session 2

MGT 533

1.) If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?

2.) What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

3.) Your parents will retire in 18 years. They currently have $250,000 and they think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don

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19 Apr 2019

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Related questions

After analyzing their social securities statements, Charles and Susan are not so sure that their social security benefits will be enough to cover their estimated monthly expenses if they are planning to retire at age 66.
The Smiths are considering opening an IRA account in 2016, after researching the pros and cons of each retirement account; they decided that Roth IRA will fit with their retirement goals. Based on the current IRS regulations, the limit for annual contributions for âMarried filling jointlyâ and Income limit of $183,000 or less is $5,500 for 2016, and $6,500 for people over 50.

Questions:

1. Calculate the total future worth of their Roth IRA account right on their 65th birthday (Normal retirement age) if Charles and Susan will deposit the maximum contribution amount allowed by IRS of $5,500 every year starting at the end of 2016 (age 40) and for the next 9 years (age 49), and then they are planning to increase their contribution to $6,500 for the next ten years (starting age 50) until they are both 65 years old. Assume the couple will not withdraw any money from their IRA during the next 25 years and the Roth IRA account will earn a) 4% and b) 6% per year.

2. The Smithâs forecasted their retirement expenses to be $24,000 starting one year after their retirement age (65 years old). Ignoring any Social Security Benefit. In other words, assuming their $24,000 annual expenses will be funded only with distributions from their Roth IRA (Future worth calculated on question 1). How long will they be able to withdraw $24,000 before exhausting all their IRA funds, assuming a Roth IRA account will earn in average account will earn a) 4% and b) 6% per year?

3. What is the maximum amount of money they can withdraw every year out of the Roth IRA account in order to deplete all the funds by their 85th birthday (use n=20 years in your calculations) Assuming a Roth IRA account will earn in average a) 4% and b)6% per year?

burgundydinosaur227

You have $35,259.87 in a brokerage account, and you plan to deposit an additional $2,500 at the end of every future year until your account totals $350,000. You expect to earn 11.7% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number.

2)What is the future value of a 10%, 5-year ordinary annuity that pays $550 each year? Round your answer to the nearest cent.

If this were an annuity due, what would its future value be? Round your answer to the nearest cent.

3)An investment will pay $100 at the end of each of the next 3 years, $300 at the end of Year 4, $500 at the end of Year 5, and $700 at the end of Year 6. If other investments of equal risk earn 9% annually, what is its present value? Round your answer to the nearest cent.

What is its future value? Round your answer to the nearest cent.

4)You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized over 6 years (72 months), and the nominal interest rate would be 10%, with interest paid monthly. What is the monthly loan payment? Round your answer to the nearest cent.

What is the loan's EFF%? Round your answer to two decimal places.

Present and Future Values of Single Cash Flows for Different Periods

Find the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.)

An initial $800 compounded for 1 year at 5.6%. Round your answers to the nearest cent.

$
An initial $800 compounded for 2 years at 5.6%. Round your answers to the nearest cent.

$
The present value of $800 due in 1 year at a discount rate of 5.6%. Round your answers to the nearest cent.

$
The present value of $800 due in 2 years at a discount rate of 5.6%. Round your answers to the nearest cent.

coralwolf381

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