Question
You would like to have ten million dollars in your bank account when you retire 30 years from now, and you think you can invest
You would like to have ten million dollars in your bank account when you retire 30 years from now, and you think you can invest any money you save today at a 15% average rate of return in the stock market.Assuming you make no other deposits or withdrawals over the next 30
years,
how much do you need to save today to achieve your ten-million-dollar goal?
A.
$23,001.98
B.
$106,606.14
C.
$151,030.54
D.
$662,117,719.60
Lets say that you have the same situation as the previous problem (need to save 10,000,000 for retirement in 30 years, can invest at a 15% rate of return).
Once you retire, you are planning on paying yourself an annual salary once a year for twenty-five years. How would you go about calculating this annual salary?
A.
Use the annuity formula from chapter 4, plug in 10,000,000 for PMT, .15 for r, and 25 for n and solve for FV
B.
Use the annuity formula from chapter 4, plug in 10,000,000 for FV, .15 for r, and 25 for n and solve for PMT
C.
Use the perpetuity formula from chapter 4, and plug in 10,000,000 for PV and .15 for r
D.
Use the annuity formula from chapter 4, plug in 10,000,000 for PV, .15 for r, and 25 for n and solve for PMT
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