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Wile E. Coyote wants to have $5,000,000 at the end of ten years to be able to afford the new ACME Rocket. Mr. Coyote intends
Wile E. Coyote wants to have $5,000,000 at the end of ten years to be able to afford the new ACME Rocket. Mr. Coyote intends to invest today $50,000 and then deposit a yearly amount that will increase with the inflation (assume 3% inflation). The interest rate ACME bank is offering is 5.25% per year compounded yearly. What is the yearly amount that Mr. Coyote needs to deposit to have $5,000,000 at the end of 10 years? Note: you do not have to solve this problem, just identify the variables (you may have to calculate an interest rate in some problems). Instructions: Consult the cash flow diagram your drew before and select from Mr. Coyote's perspective, the problem set up that best describes this problem: OP= $50,000(P/A, 3%, 5.25%, 10) O A= $50.000 (A/P. 3%, 10) + $5,000,000 (A/F, 5.25%, 10) OF=$50,000(P/F, 5.25%, 10) + A (P/A, 5.25%, 10)(F/P.5.25%, 10)+$5.000.000 O A = ($5,000,000 - $50.000(F/P, 5.25%, 10)] / [(P/A, 3%, 5.25%, 10) (F/P, 5.25%, 10) O F=-$50,000(F/A, 3%, 5.25%, 10) Wile E. Coyote wants to have $5,000,000 at the end of ten years to be able to afford the new ACME Rocket. Mr. Coyote intends to invest today $50,000 and then deposit a yearly amount that will increase with the inflation (assume 3% inflation). The interest rate ACME bank is offering is 5.25% per year compounded yearly. What is the yearly amount that Mr. Coyote needs to deposit to have $5,000,000 at the end of 10 years? Note: you do not have to solve this problem, just identify the variables (you may have to calculate an interest rate in some problems). Instructions: Consult the cash flow diagram your drew before and select from Mr. Coyote's perspective, the problem set up that best describes this problem: OP= $50,000(P/A, 3%, 5.25%, 10) O A= $50.000 (A/P. 3%, 10) + $5,000,000 (A/F, 5.25%, 10) OF=$50,000(P/F, 5.25%, 10) + A (P/A, 5.25%, 10)(F/P.5.25%, 10)+$5.000.000 O A = ($5,000,000 - $50.000(F/P, 5.25%, 10)] / [(P/A, 3%, 5.25%, 10) (F/P, 5.25%, 10) O F=-$50,000(F/A, 3%, 5.25%, 10)
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