BEGINNING WITHDRAWALS Your father now has $1,000,000 invested in an account that pays 9.00%. He expects inflation to average 3%, and he wants to make annual constant dollar (real) beginning-of-year withdraoals over each of the next 20 years so the account has a zero balance after the 20th year. How large will his initial withdrawal (and thus constant dollar [real] withdrawals) be

BEGINNING WITHDRAWALS Your father now has $1,000,000 invested in an account that pays 9.00%. He expects inflation to average 3%, and he wants to make annual constant dollar (real) beginning-of-year withdraoals over each of the next 20 years so the account has a zero balance after the 20th year. How large will his initial withdrawal (and thus constant dollar [real] withdrawals) be

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 1P

See similar textbooks

Similar questions

Your father now has $1,000,000 invested in an account that pays 9.00%. He expects inflation to average 3%, and he wants to make annual constant dollar (real) end-of-year withdrawals over each of the next 20 years and end up with a zero balance after the 20th year. How large will his initial withdrawal (and thus constant dollar [real] withdrawals) be?
To establish a "rainy day" cash reserve account, a certain company deposits $14,000 of its profit at the end of each quarter into a money market account that pays 1.85% interest compounded quarterly. (Round your answers to the nearest cent.) (a) How much (in $) will the account be worth in 4 years? $ (b) How much (in $) will the account be worth in 5.5 years? $
You found an investment opportunity to deposit $15,000 every year for 10 years into an account earning8%. You estimate general inflation to be 3% per year. What is the dollar value of your account at the endof 10 years in today’s real dollars?
1) You put $150,000 into a savings account paying 3% compounded monthly. How many full monthly withdrawals of $10,000 can you make? a) what is the smaller concluding withdrawal one month after your last full withdrawal?
You make $10,000 deposit 1 year from now, $15,000 deposit 3 years from now and $20,000 deposit 5 years from now in real dollars. You plan to retire 30 years from now. What monthly income you will receive due to these deposits, in real dollars, over five years after the retirement? The first payment would be received at the end of the first month after the retirement and the last payment on the month ending the fifth year. The nominal rate is 8.5% and the inflation expectations are 3.2%. Please use excel
You make $10,000 deposit 1 year from now, $15,000 deposit 3 years from now and $20,000 deposit 5 years from now in real dollars. You plan to retire 30 years from now. What monthly income you will receive due to these deposits, in real dollars, over five years after the retirement? The first payment would be received at the end of the first month after the retirement and the last payment on the month ending the fifth year. The nominal rate is 8.5% and the inflation expectations are 3.2%.
Suppose you have deposited $10,000 in your high-yield saving account today. The savings account pays an annual interest rate of 4%, compounded semi-annually. Two years from today you will withdraw R dollars. You will continue to make additional withdraws of R dollars every 6 months, until you have a zero balance after your last withdrawal 5 years from now. Find R. Please add in steps and formulas!
Taki deposits P50,000 in a bank account at 6% compounded monthly for 5 years. If the inflation rateis 6.5% per year continues for this period. Will this effectively protect the purchasing power of theoriginal principal? Show your complete solution.
1)Using an interest rate of $4.5% compounded monthly, how much does a company need to deposit now,such that they have the ability to withdaw $5,000 at the start of each quarter and have $50,000 left over in15 years? 2)Given an interest rate of 2.8% compounded quarterly, what amount is required to be deposited todayalong with semi-annual contributions of $2,500 such that the cumulative balance in 15 years is $250,000? For example $12,345.67Answer:A contract between two parties (company A & B) was created such that in return for equipmentA would prou
You will deposit $10,000 today. It will grow for 10 years at 10% interest compounded monthly. You will then withdraw the funds quarterly over the next 4 years. The annual interest rate over those 4 years is 8%. Your annual withdrawal will be: Multiple Choice $1691.90. $1993.74. $1789.37. $660.87.
Hamilton wants to accumulate ₺ 24.000 at the end of 4 years. It starts quarterly payments in a bank account which pays J4= 6% (annual interest rate with quarterly compounding). a.) If, after 2 years compounded at %6(annual interest rate with quarterly compounding) , bank switches the rate to J4= 8%, what would be the size of quarterly payments for last 2 years required to meet the ₺ 24.000 goal?
Beginning 2 years from today, you deposit $1,500 per year for 18 years (18 deposits); for the following 24 years you deposit $2,000 in the first year and 3% more in each successive year. (That is, this series has 24 total deposits starting at $2,000 and growing at a 3% rate. For example, the second year’s deposit would be $2,060.) What is the present value today? (Use a 10% discount rate throughout.) What would you have in your account 35 years from today if every cash flow was compounded or discounted at 10%?