Question
Please answer the questions with calculation to support them. Also please answer within 2.5 hours 1. You are considering investing in an Emerging Market bank
Please answer the questions with calculation to support them. Also please answer within 2.5 hours
1.You are considering investing in an Emerging Market bank account that pays a nominal annual rate of 18% on dollar deposits, compounded monthly (i.e the account pays [0.18/12]% per month). If you invest $5,000 at the beginning of each month, how many months will it take for your account to grow to $250,000? Round fractional months up.
2.Your sister turned 35 today, and she is planning to save $5,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund that will provide a return of 8% per year. She plans to retire 30 years from today, when she turns 65, and she expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year.
3.Assume that you saved $750,000 and invested in an account that pays 5.00%. You expect inflation to average 2%, and you want to make end-of-year withdrawals growing at the rate of inflation over each of the next 20 years and end up with a zero balance after the 20th year. How large will your initial withdrawal be?
4.You anticipate that you will need $1,000,000 when you retire 30 years from now. You plan to make 30 deposits, beginning today, in a bank account that will pay 5% interest, compounded annually. You expect to receive annual raises of 3%, so you will increase the amount you deposit each year by 3%. (That is, your 2nd deposit will be 3% greater than your first, the 3rd will be 3% greater than the 2nd, etc.) How much must your 1st deposit be if you are to meet your goal?
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