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Value of a retirement
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- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?Value of a retirement annuity. Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $ 14,000 at the end of each year for the next 15 years. If you don't purchase this annuity, you can invest your money and earn a return of 8%. What is the present value of the annuity?
- Value of a retirement annuity. Your bank manager has informed you about a new investment plan that will provide you with $5,000 at the end of each of the next 20 years. If you have an opportunity to earn a guaranteed return of 6%, what is the most you would pay for this annuity right now?Thank you.● An investment will provide you with $100 at the end of each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually? • What is the present value of the above if the payments are received at the beginning of each year? • If you deposit those payments into an account earning 8%, what will the future value be in 10 years? • What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year?Your insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%. What should be the present value of this annuity? If you are given the first payment immediately starting today, what should be the worth of this annuity? Which payment mode will you accept? What will be basis of your decision under time value of money concept?
- Suppose you have an opportunity to buy an annuity that pays $3,500 at the end of each year for 6 years, at a 9% interest rate. What is the most you should pay for the annuity? USE FORMULATo find the value of an annuity due, you will multiply the value of the ordinary annuity by ___________ You are planning to put $1,750 in the bank at the end of each year for the next six years in hopes that you will have enough money for a down payment on a house. If you are investing at an annual interest rate of 5%, you'll have accumulated _________ at the end of seven years. a. 20,983 b. 14,961 c. 14,249 d. 19, 795 You decided to deposit your money in the bank at the beginning of the year instead of the end of the same year, but now you are making payment of $2,000 at an annual interest rate of 3%. How much money will you have available at the end of 8 years. a. 15,304 b. 18,318 c. 20,983 d. 19,795A new investment opportunity for you is an annuity that pays $800 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
- A new investment opportunity for you is an annuity that pays $550 at the END of each year for 3 years. You could earn a rate of return of 5.5% per year on your money in other, similar investments. What is the most you should pay for the annuity? Express your answer in dollars and cents.Thinking ahead to retirement, assume you will be able to earn a 10 percent return on your investments. If you have saved $400,000 and expect to live 16 more years when you retire, calculate the annual annuity you will be able to receive for 16 years. (Enter your answer as a positive number rounded to 2 decimal places.) Annuityc) Retirement Investment: Savings at Retirement = Saving Periods = Interest Rate = Savings Deposit / month= monthly deposits / month
