A grandfather is planning to leave his only granddaughter well off when she reaches the age of 25. He plans to deposit a lump sum now, which is her second birthday, such that she will have enough money to live comfortably without working. He wants her to have an amount that would have the same purchasing power as $2 million today. If he can invest the money now and earn an average market interest rate of 8% per year while the inflation rate averages 4% per year, what amount must he deposit?

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Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of…

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A: Given Information: Annual payment is $85,000 for 30 years Interest rate is 7.5%

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A: N = 30, PV =0, PMT = 8000, rate = 7% use FV function in Excel amount accumulated at retirement =…

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A: Future value = Present value * ( 1 + rate)time

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A: Annuity refers to the payment made at each year at a specified interest rate to have a desired sum…

Q: Experts say that the baby boom generation (born 1946-1960) cannot count on a company pension or…

A: Yearly Deposit = $3,000 Interest Rate = 12% compounded semiannually Time Period = 15 Years

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A: Note: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts…

Q: Your newborn daughter has received a total of 8,000 in cash from various friends and relatives. If…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Suppose Mr. Ali wish to retire thirty years from today. He has just recieved a lump-sum amount of…

A: Formulas:

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A: The future value of the cash flow is the current worth of a cash flow at a certain rate of interest…

Q: Under these assumptions, how much can he spend each year after he retires?

A: Future value: Future value is the amount derived from compounding the present amount or cashflows.…

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A: given infromation   present age = 30 years and he wants to retire when he is 60  interest rate =…

Q: oday Dante and Sharon had their first child.  All of the grandparents gave them money to help out,…

A: Present value is the amount that is invested in order to receive a specific goal in the future…

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Q: our sister turned 35 today, and she is planning to save Php7,000 per year for retirement, with the…

A:

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A: The number of years required to reach the target can be calculated with the help of future value…

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A: Interest rate per year is 7% Future Value is $500,000 Yearly Contribution is $8,000   To Find: Time…

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A: COLA Rate after inflation=2.9*1.029=2.98% First payout=$24000 Years=20 Present value of all payout=?

Q: Richard wants to ensure that at least some of his descendants are well educated in perpetuity. He is…

A: The present value of a lump sum: The present value of a lump sum (single) investment made at a…

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A: The question is based on the concept of Annuity

Q: Matt recently deposited $41,250 in a savings account paying a guaranteed interest rate of 2.6…

A: "Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: A woman desires to have $400,000 in a savings account when she retires in 20 years. Because of the…

A: The future value of the cash flow is the future worth of a cash flow at a certain rate of interest…

Q: Anthony and Michelle Constantino just got married and received ​$28,000in cash gifts for their…

A: Data given: Amount received =$28,000 PV=Amount to be invested = $28000 /2 = $14000 r=Rate = 10%…

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A: Time value of money- It is based on the concept that money earned today is worth more than similar…

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Q: Your oldest daughter is about to start kindergarten at a private school. Tuition is $10,000 per…

A: Formula: PV cash flow=Payment×1+rn1+rn

Q: Your grandparents are asking you for advice on when they should start collecting social security…

A: a) Computation:

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A: Present value of the growing perpetuity is the amount she needs to fund today This can be calculated…

Q: On his son's fifth birthday, a man decides to deposit a certain amount which will be equivalent to…

A: given, FV = P28000 NOMINAL RATE = 5.5% INFLATION = 8.7% N = ( 18-5) = 13 YEARS

Q: On his son's fifth birthday, a man decides to deposit a certain amount which will be equivalent to…

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A: Future Value = Present Value * (1+r)^n Where, r = rate of interest per period  n = no. of…

Q: t cost her to buy such an annuity today

A: SOLUTION: Present Value ​=C×[1−(1+i)−n​/i]​                        =$50,000×[1-(1+0.725)]-30/0.725…

Q: How much money would you need to deposit today in an account to fund these kids' retirement?

A: The present value is the current value of the future sum of money which is given for a specified…

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A: Using excel PMT function

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Q: What amount will he receive assuming an interest rate of 4.005%? b) What amount will he receive…

A: Future Value: It is the future worth of the annual cash flows or the current sum of money. Future…

Q: Your client is 40 years old, and she wants to begin saving for retirement, with the first payment to…

A: Given: Yearly deposit = $5000 Interest = 11% Total time = 25 years            (65 -40 =25) 1.Using…