Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A young 25 years old engineer decides to start investing for her retirement in an investment plan with an interest rate of 8%, compounded quarterly.

image text in transcribed
image text in transcribed
A young 25 years old engineer decides to start investing for her retirement in an investment plan with an interest rate of 8%, compounded quarterly. She thinks that $600,000 having the same purchasing power than today's dollars will be enough to retire when she will be 65 years old. She estimate the inflation rate to be 2%. (a) What is the sub-period interest rate is for one quarter? Select between Part (a) Options 1 to 3. (b) What is the value of $600,000 today (year 0 or $) in current dollars at year 40 (or $40)? Select between Part (b) Options 1 to 4. (c) If she wants to have $40 2 millions (i.e. year40 dollars) and she plans to make 160 equal deposits, what should be the quarterly amount deposited in current dollars? Select between Part (c) Options 1 to 4. (d) If she plans to have $600,000 having the same purchasing power than today's dollars and to make 40 equal deposits, once every year, what should be the amount deposited in real dollars? Select between Part (d) Options 1 to 4. Select 4 correct answer(s) Part (a) - Option 1: is=2% Part (a) - Option 2: is=8% Part (a) - Option 3: is=2.7% Part (b) - Option 1: $40 271,734 Part (b) - Option 2: $40 600,000 Part (b) - Option 3: $40 1,324,824 Part (b) - Option 4: $40 1,080,000 Part (c) - Option 1: A=$ current 1,757 Part (c) - Option 2: A=$ current 8,278 Part (c) - Option 3: A=$ current 7,720 Part (c) - Option 4: A=$ current 803 Part (d) - Option 1: A=$ real 3,993 (Part (d) - Option 1: A=$ real 3,761 Part (d) - Option 1: A=$ real 2,136

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics Principles For A Changing World

Authors: Eric Chiang

4th Edition

1464186677, 978-1464186677

More Books

Students also viewed these Economics questions

Question

8. How can an interpreter influence the message?

Answered: 1 week ago

Question

Subjective norms, i.e. the norms of the target group

Answered: 1 week ago