Answered step by step
Verified Expert Solution
Question
1 Approved Answer
14. After graduation, you plan to work for your local bank for 12 years and then start your own business. You expect to save and
14. After graduation, you plan to work for your local bank for 12 years and then start your own business. You expect to save and deposit $7,500 a year for the first 6 years and $15,000 annually for the following 6 years. The first deposit will be made a year from today. In addition, your grandfather just gave you a $25,000 graduation gift which you will deposit immediately. If the account earns 9% compounded annually, how much will you have when you start your business 12 years from now? 15. Muffin Megabucks is considering two different savings plans in 10 years. The first plan would have her deposit $500 every six months, and she would receive an interest rate at 7% p.a. (compounding semi-annually). Under the second plan she could deposit $1,000 every year with the rate of interest of 7.5% p.a. (compounding annually). Which plan should Muffin use? (Assuming that the initial deposit of Plan 1 would be made 6 months from now, and with Plan 2, one year from now). 16. Kate's financial advisor tells her that she will need $2 million to fund her retirement. She plans to work for another 30 years before retiring. She will make 30 contributions to a pension plan. How much will each contribution be, if the interest rate is 9% p.a.? 17. Mary has just retired and has $1 million in her retirement account. Her bank offers an arrangement whereby the bank takes her $1 million now and pays her $110,000 at the end of each year for the next 20 years. Is it a fair deal, if the offered rate is 10% p.a
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started