Finance Chap 1 and 2

,Sarah L. GJanuary 6, 2013 Written Assignment #1 1. A) $1,000 with 5% matter to by and by 10 socio-economic classs gives you $1,628. Therefore, you would gain $628 in interest. B) If the interest is drift back separately 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 brain sum total higher each year, giving much gold after(prenominal) 10 years. Compounded interest allows for more money that simple interest would. 2. A) If the individual douses at the mature of 65, having started the computer programme at hop on 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 savior 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 = $120,53 1 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 amass $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 rente Due x (1.09)18; PV of Annuity = 100.000/(1.09)18; PV of Annuity = $21,199! .37 PV of Annuity = honorarium x [1.(1.09)-18] /0.09; $21,199.37 = recompense 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 all-inclusive essay, order it on our website: OrderEssay.net

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