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Use for Questions 11-13: An urban farmer owns a plot of land and expects it to generate $30,000 of profits this year. She also anticipates
Use for Questions 11-13: An urban farmer owns a plot of land and expects it to generate $30,000 of profits this year. She also anticipates her profits to grow at the rate of inflation as she adjusts her prices accordingly year-by-vear. Aggregate prices are supposed to rise at an average rate of 2% for the foreseeable future. 12) If she invests all her profits over the next 30 years into an account earning an average return of 5.57%, how much real wealth will she have accumulated by the time she retires? 13) How much NOMINAL cash does that equate to? i.e. What would be the account's balance at the end of 30 years? 14) If she expects to live 25 years after retirement and switches her funds to a less risky portfolio offering an average return of 3.53%, what real annuity can her funds support? Use for Questions 11-13: An urban farmer owns a plot of land and expects it to generate $30,000 of profits this year. She also anticipates her profits to grow at the rate of inflation as she adjusts her prices accordingly year-by-vear. Aggregate prices are supposed to rise at an average rate of 2% for the foreseeable future. 12) If she invests all her profits over the next 30 years into an account earning an average return of 5.57%, how much real wealth will she have accumulated by the time she retires? 13) How much NOMINAL cash does that equate to? i.e. What would be the account's balance at the end of 30 years? 14) If she expects to live 25 years after retirement and switches her funds to a less risky portfolio offering an average return of 3.53%, what real annuity can her funds support
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