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##### Finance Misc. Problems

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solution

**Question**

Question;1. An investment offers $8,800 per year for 14 years, with the first payment occurring 1 year from now.Assume the required return is 12 percent.Requirement 1:What is the value of the investment today? (Enter rounded answer as directed, but do not userounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g.,32.16).)Present Value:?Requirement 2:What would the value be if the payments occurred for 39 years? (Enter rounded answer as directed,but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimalplaces (e.g., 32.16).)Present Value:?Requirement 3:What would the value be if the payments occurred for 74 years? (Enter rounded answer as directed,but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimalplaces (e.g., 32.16).)Present Value:?Requirement 4:What would the value be if the payments occurred forever? (Enter rounded answer as directed, but donot use rounded numbers in intermediate calculations. Round your answer to 2 decimal places(e.g., 32.16).)Present Value:?2. You are planning your retirement in 10 years. You currently have $166,000 in a bond account and$606,000 in a stock account. You plan to add $7,400 per year at the end of each of the next 10 years toyour bond account. The stock account will earn a return of 11 percent and the bond account will earn areturn of 7.5 percent. When you retire, you plan to withdraw an equal amount for each of the next 24years at the end of each year and have nothing left. Additionally, when you retire you will transfer yourmoney to an account that earns 6.75 percent.Required:How much can you withdraw each year in your retirement? (Enter rounded answer as directed, but donot use rounded numbers in intermediate calculations.Round your answer to 2 decimal places(e.g., 32.16).)Annual withdrawal amount=?

Paper#48865 | Written in 18-Jul-2015

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