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The formulas needed are attached. Thanks 1. You are saving for a new house, and you put $2000 per year in an account paying 4%.
The formulas needed are attached. Thanks
1. You are saving for a new house, and you put $2000 per year in an account paying 4%. The first payment is made today. How much will you have at the end of 6 years? 2. The expected dividend is $2, and dividends are expected to grow at 4% forever. If the discount rate is 11%, what is the value of this promised dividend stream? 3. A defined-benefit retirement plan offers to pay $10,000 per year for 6 years and increase the annual payment by 5% percent each year. What is the present value at retirement if the discount rate is 10 percent? Formulas - Annuities (Ordinary): PV=C[r1(1+r)t1]FV=C[r(1+r)t1] - Annuity Due: FV=C[r(1+r)1](1+r) Effective Annual Rate: EAR=[1+mAPR]m1 - Effective Annual Rate (Continuous Compounding): EAR=eq1 PV=C/r Growing Perpetuity: PV=rgC APR: APR= period rate X the number of periods per year (m) Period Rate; Period Rate =APR/ the number of periods per year (m) Step by Step Solution
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