Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 1 a. If you deposit $90,000 in a bank account that pays 8% interest annually, how much will be in your account after 7

QUESTION 1

a. If you deposit $90,000 in a bank account that pays 8% interest annually, how much will be in your account after 7 years? Show your calculations. Round to two decimal places.

b. What is the present value of a security that will pay $50,000 in 20 years if securities of equal risk pay 9% annually? Show your calculations. Round to two decimal places.

QUESTION 2

Roberts parents currently have $300,000 saved and they plan to retire in 20 years. Based on their anticipated retirement lifestyle, they estimate they will need $2,000,000 at retirement.

a. If they dont save any additional funds, what annual rate of return do they need to earn to reach their goal? Show your calculations. Round to two decimal places.

b. If they save an additional $40,000 a year, what annual rate of return do they need to earn to reach their goal? Show your calculations. Round to two decimal places.

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_2

Step: 3

blur-text-image_3

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

Corporate Finance A Focused Approach

Authors: Michael C. Ehrhardt, Eugene F. Brigham

4th Edition

1439078084, 978-1439078082

More Books

Students also viewed these Finance questions

Question

What are the types of Poka Yoke? Explain them. AppendixLO1

Answered: 1 week ago

Question

Describe the characteristics of a 360-degree performance appraisal.

Answered: 1 week ago