Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer following questions with step thank you so much. Homework 1 Questions 1-3 are related the introduction slide set 1) This question is related

please answer following questions with step thank you so much. image text in transcribed
Homework 1 Questions 1-3 are related the introduction slide set 1) This question is related to Equation 3 from the introduction slide set. I want you to derive the following formula: If you invest one dollar per year at the end of every year for n years, and earn a rate of return equal to r, how much money will you have at the end of n years? Hint: start with: the amount is equal to FV = (1+r)"'+(1+r)^2+ (1+r)+...(1+r)+1 Note: If you solve this problem using the old assignment that I had posted on Monday, I'll still accept that answer. The only difference between the equation you derive above and the one on the slides is that on the slides you can have any cash flow being put in. The above equation assumes cash flow = $1 per time period. All you have to do to change the formula is multiply what is above by the cash flow (e.g. invest X dollar per year instead of $1 per year). 2) At the end of every year, for 20 years, I invest $4,000 in the stock market. I earn 8% per year. How much money do I have at the end of 20 years? 3) A company agrees to pay a pension of $50,000 per year at the end of every year for 40 years. At a 5% interest rate, what is the present value of this pension obligation (ie, how much money do we have to invest today to pay for this)

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

Personal Finance

Authors: Megan Noel, Dan French

2nd Edition

1465246479, 9781465246479

More Books

Students also viewed these Finance questions

Question

summarize the main content or argument of the webpage or article.

Answered: 1 week ago

Question

How do you want me to help you?

Answered: 1 week ago