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CHP 5

Question 1

QUESTION 1

Pearl Medavoy will invest $8,640 a year for 20 years in a fund that will earn 12% annual interest. Click here to view factor tables. If the first payment into the fund occurs today, what amount will be in the fund in 20 years? If the first payment occurs at year-end, what amount will be in the fund in 20 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

First payment today		$enter a dollar amount rounded to 0 decimal places
First payment at year-end		$enter a dollar amount rounded to 0 decimal places

QUESTION 2

Henry Fillmores lifelong dream is to own his own fishing boat to use in his retirement. Henry has recently come into an inheritance of $438,800. He estimates that the boat he wants will cost $314,100 when he retires in 5 years. Click here to view factor tables. How much of his inheritance must he invest at an annual rate of 15% (compounded annually) to buy the boat at retirement? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Investment amount

$enter the investment amount in dollars rounded to 0 decimal places

QUESTION 3

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CHP 5

Question 3

Steve Fillmores lifelong dream is to own his own fishing boat to use in his retirement. Steve has recently come into an inheritance of $442,800. He estimates that the boat he wants will cost $325,100 when he retires in 5 years. Click here to view factor tables. Assuming quarterly compounding of amounts invested at 10%, how much of Steve Fillmores inheritance must be invested to have enough at retirement to buy the boat? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Investment amount

Question 4

Chris Jackson invests $37,700 at 10% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Chris withdraws the accumulated amount of money.

(a)

Compute the amount Chris would withdraw assuming the investment earns simple interest.

Total withdrawn