Finance Chap 1 and 2

,Sarah L. GJanuary 6, 2013
Written Assignment #1
1. A) $1,000 with 5% interest by and by 10 socio-economic classs gives you $1,628. Therefore, you would gain $628 in interest.

B) If the interest is move back each form, a total of $500 would be gain because the $1,000 investment would earn $50 of unprejudiced interest each year.

C) The answers are different because if the interest is left untouched, it makes the principal sum total higher each year, giving more money after(prenominal) 10 years. Compounded interest allows for more money that simple interest would.

2. A) If the individual retires at the mature of 65, having started the program at age 40, there would be $219,318 in the handbill. $3,000 x (8% in 25 years)
3000 x 73.106 = $219,318

B) If the saver defers retirement until age 70 and continues contributions, there would be $120,531 left. $3,000 x (8% in 30 years)
3,000 x 113.283 = 339,849 219,318 = $120,531 more

C) There would be $102,860 more if the saver discontinues the contributions at age 65 but does not retire til age 70. $219,318 x (8% in 5 years)
$219,318 x 1.469 = 322,178.14 219,318.00 = $102,860.14

3. A) A 45 year old woman would have accumulated $102,320.24 in her account if she retires at 65.
$2,000 x (9% in 20 years)
$2,000 x 51.



160 = $102,320

B) At retirement, she can withdraw $11,208 each year. $102,320 = x *(1-1.09^-20)/.09 x = $ 11,208
5. If a parent wants to save 100,000 in 18 years in an account that earns 9%, he would have to invest $2,421.24 annually.
FV= PV of rente Due x (1.09)18; $100,000 = PV of annuity Due x (1.09)18; PV of Annuity = 100.000/(1.09)18; PV of Annuity = $21,199.37
PV of Annuity = Payment x [1.(1.09)-18] /0.09; $21,199.37 = Payment x 8.7556; Payment = $21,199.37/8.7556; Payment = $2,421.24
6. If a widow has $93,000 investment pliant 9% annually, she can NOT withdraw $16,000 a year for the next 10 years. PV = Payment x [1-(1.09)-10]/0.09; Pmnt =...If you want to bring in a full essay, order it on our website: Ordercustompaper.com



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