Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please answer problems 1,2,&3. Please show all work for a thorough understanding. Handwriting MUST be LEGIBLE. 1. You invest $1,000 in a certificate of deposit
Please answer problems 1,2,&3. Please show all work for a thorough understanding. Handwriting MUST be LEGIBLE. 1. You invest $1,000 in a certificate of deposit that matures after ten years and pays 5 percent interest, which is compounded annually until the certificate matures. a. How much interest will you earn if the interest is left to accumulate? b. How much interest will you earn if the interest is withdrawn each year? c. Why are the answers to a and be different? 2. A self-employed person deposits $3,000 annually in a retirement account (called a Keogh or H.R. 10 plan) that earns 8 percent. a. How much will be in the account when the individual retires at the age of 65 if the savings program starts when the person is age 40? b. How much additional money will be in the account if the saver defers retirement until age 70 and continues the contributions? c. How much additional money will be in the account if the saver discon- tinues the contributions at age 65 but does not retire until age 702 3. A 45-year-old woman decides to put funds into a retirement plan. She can save $2,000 a year and earn 6 percent on this savings. How much will she have accumulated if she retires at age 65? At retirement how much can she withdraw each year for 20 years from the accumulated savings if the savings continue to earn 6 percent
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