Week 3 Fin 419 Assignment

Good Essays
1051 Words
Grammar
Plagiarism
Writing
Score
Week 3 Fin 419 Assignment
FIN/419 - Week 3 Individual Assignment form the readings

P4–23 (LG-2/LG-3) Funding your retirement you plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive \$20,000 at the end of each year for the 30 years between retirement and death (a psychic told you would die exactly 30 years after you retire). You know that you will be able to earn 11% per year during the 30-year retirement period.
a. How large a fund will you need when you retire in 20 years to provide the 30-year, \$20,000 retirement annuity? n= 30 r= 11.00% PVIFA= 30 periods, 11% Rate = 8.693793
Annuity= 20,000 / Present value = \$173,876 = 20000 X 8.693793
Answer= \$ 173,876 Retirement money required

b. How much will you need today as a single amount to provide the fund calculated in part A if you earn only 9% per year during the 20 years preceding retirement? n= 20 r= 9.00% FVIF= 20 periods, 9% = 5.604411
Amount required in 20 years = \$ 173,876
Amount to be invested = \$ 31,025

c. What effect would an increase in the rate you can earn both during and prior to retirement have on the values found in parts A and B? Explain.
If the interest in Part A went from .11 to .20 then we would need only \$99,578.73.
In Part B it was .09 went to .15 including the interest from Part A was at .11 you would need \$10,623.86
This is because higher compounding interest rates will provide more money, therefore you will not be required in today to get the same as tomorrow.

P4–46 (LG-6) Loan amortization schedule Joan Messineo borrowed \$15,000 at a 14% annual rate of interest to be repaid over 3 years. The loan is amortized into three equal, annual, end-of-year payments.
a. Calculate the annual, end-of-year loan payment.
a. PMT=\$15,000 ÷ (PVIFA 14%, 3) PMT=\$15,000 ÷ 2.322 PMT= \$ 6,459.95 Answer: \$ 6, 4459.97

b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments.

End of

You May Also Find These Documents Helpful

• Satisfactory Essays

the years of me

• 473 Words
• 2 Pages

2)Calculate the amount of your simple interest investment after 10 years. Remember to use the same rate and compounding as in #1.…

• 473 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

a. If you were going to make a deposit monthly, how much would you have to set aside per month to have \$1,000,000 when you are 65?…

• 705 Words
• 3 Pages
Satisfactory Essays
• Better Essays

FIn 580

• 1085 Words
• 4 Pages

a. Starting with \$20,000, how much will you have in 20 years if you can earn 5% on your money?…

• 1085 Words
• 4 Pages
Better Essays
• Satisfactory Essays

Solution: The answer is D. PV=-50,800; FV=74,000; N=7; P/Y=1; C/Y=12; CPT I/Y6. Sara decides to set up a retirement fund by depositing \$ 18 at the end of each day for 18…

• 1243 Words
• 5 Pages
Satisfactory Essays
• Good Essays

Look for an annuity that will be equal to \$26,103.01 in present value. Let S be the unknown amount of fixed annual savings.…

• 1422 Words
• 7 Pages
Good Essays
• Satisfactory Essays

Question 3: The future value of \$1,000 deposited a year for 5 years earning 4 percent would be approximately ( 3 pts)…

• 372 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

Econ Final

• 518 Words
• 3 Pages

16. \$3000 annual contribution to a retirement account earning 6% will be worth___________ in 20 years.…

• 518 Words
• 3 Pages
Satisfactory Essays
• Satisfactory Essays

Present Value

• 330 Words
• 2 Pages

a. Borrowed \$103,000 for nine years. Will pay \$9,270 interest at the end of each year and repay the \$103,000 at the end of the 9th year.…

• 330 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

Today is your birthday and you are now 37! You are planning your retirement and have decided that you can save \$8,000.00 per year to go toward your retirement. The plan is to make your first deposit one year from today. You found a mutual fund that is expected to provide a return of 7.5% per year. You plan to retire at the age of 65, exactly 28 years from today. It is your expectation that you will live for 25 years after your retirement. Under these assumptions, how much can you spend each year after you retire? Your first withdrawal will be made at the end of your first retirement year.…

• 278 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

Fi 360 Week 2

• 418 Words
• 2 Pages

3-2. Dixon Shuttleworth has a large sum of money that he wants to invest to finance his retirement. He has been presented with three options. The first investment offers a 5% return for the first five years, a 10% return for the next five years, and a 20% return thereafter. The second investment offers 10% for the first ten years and 15% thereafter. The third investment offers a constant 12% rate of return. Determine which of these investments the best for Dixon is if he plans to retire in the following number of years.…

• 418 Words
• 2 Pages
Satisfactory Essays
• Good Essays

a. If she starts making these deposits on her 36th birthday and continues to make deposit until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement?…

• 441 Words
• 2 Pages
Good Essays
• Good Essays

1. You are considering various retirement plans. Your goal is to have a lump sum of \$3,000,000 available (‘in the bank’) when you retire at age 67. The various plans, with their payment schedules, are listed below. In each case, calculate the payment(s) that must be made into the plan to ensure that you have the \$3,000,000 available. For each plan, you may assume that your opportunity cost of funds is 6% per year; for each plan, you may assume that the phrase “at age XX” means the same thing as “on your XX’th birthday”.…

• 1839 Words
• 8 Pages
Good Essays
• Satisfactory Essays

A) FIRST MUST GET THE PRESENT VALUE(PV) - PLUG IN THE (PV) TO “FV= pv * [1 + (1+rm(mt))]”…

• 262 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

Time Value

• 253 Words
• 2 Pages

* b. What would be the future value if the interest rate is a compound interest rate?…

• 253 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

Technology is pervading all levels of mathematics teaching and learning in our modern world, bringing ever more sharply into focus the change from traditional pencil and paper learning to a mixture of calculator, computer and pencil and paper learning environments. Currently the loan has 25 years remaining. Therefore to find out the P&I payment, you would plug in 300 for N (25x12), 5.75% for I, 0 for FV, and \$112,242.47 for PV, and then press PMT which gives you the \$706.12. However, we want to find out how much more money they have to pay to pay off the loan in 20 years instead of 25. Therefore change N to 240 (20x12) instead of 300. Then press PMT and we should get \$788.04. Next, subtract the P&I payment they are making now (706.12) from \$788.04, which tells you they need to pay \$81.92 extra towards the principal each month to have the loan paid off in 20 years instead of 25.…

• 428 Words
• 2 Pages
Satisfactory Essays