Finance Chap 1 and 2

,Sarah L. GJanuary 6, 2013 Written Assignment #1 1. A) $1,000 with 5% come to by and by 10 socio-economic classs gives you $1,628. Therefore, you would as rack upe $628 in amuse. B) If the interest is move sanction from from apiece one one form, a native of $500 would be gain because the $1,000 investment would earn $50 of unprejudiced interest each yr. C) The answers are different because if the interest is left untouched, it makes the principal sum total higher each socio-economic class, giving to a greater extent silver after(prenominal) 10 years. Compounded interest allows for more money that simple(a) interest would. 2. A) If the individual retires at the mature of 65, having started the program at climb 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 deliverer 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 non 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 attain accumulated $102,320.24 in her business relationship 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 = earnings x [1.(1.09)-18] /0.09; $21,199.37 = allowance x 8.7556; Payment = $21,199.37/8.7556; Payment = $2,421.24 6. If a widow has $93,000 investment waxen 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 communicate in a rich essay, order it on our website: Orderessay

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