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8.5.0

Jane is going to start her very own smoothies shop in 10 years. Jane needs to accumulate 200,000 ( in todays Dollars) in 10 years to have enough money to start making smoothies. Inflation will be 4%. Jane can earn 9% compound annual after tax rate of return on her investments. Jane wants to increase her annual saving with inflation adjustment. What will Question 1. Jane's payment be at the end of the second year? Question 2. What is annual equal saving? Question 3. They will increase their savings annually at the rate of inflation. How much should they save at the end of year 2? Question 4. They will increase their savings annually at the rate of inflation. How much should they save at the beginning of year 2? Inflation Rate of Return (Nominal) IARR N FV in current dollar FV in future dollar Exisiting saving A: PMT Equal Payments B: PMT Serial Payments C: PMT Serial Payments Year Balance Balance Balance 1 2 3 4 5 6 7 8 9 10 Jane is going to start her very own smoothies shop in 10 years. Jane needs to accumulate 200,000 ( in todays Dollars) in 10 years to have enough money to start making smoothies. Inflation will be 4%. Jane can earn 9% compound annual after tax rate of return on her investments. Jane wants to increase her annual saving with inflation adjustment. What will Question 1. Jane's payment be at the end of the second year? Question 2. What is annual equal saving? Question 3. They will increase their savings annually at the rate of inflation. How much should they save at the end of year 2? Question 4. They will increase their savings annually at the rate of inflation. How much should they save at the beginning of year 2? Inflation Rate of Return (Nominal) IARR N FV in current dollar FV in future dollar Exisiting saving A: PMT Equal Payments B: PMT Serial Payments C: PMT Serial Payments Year Balance Balance Balance 1 2 3 4 5 6 7 8 9 10