Serena Monroe wants to create a fund today that will enable her to withdraw $31,3 take place 5 years from today. Click here to view factor tables. If the fund earns 11% interest, how much must Serena invest today? (Round factor w 450.
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- If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32 are made starting on December 31, 2020, that will deplete the fund, what is the interest rate being earned if interest is compounded annually?Comprehensive The following are three independent situations: 1. K. Herrmann has decided to set up a scholarship fund for students. She is willing to deposit 5,000 in a trust fund at the end of each year for 10 years. She wants the trust fund to then pay annual scholarships at the end of each year for 30 years. 2. Charles Jordy is planning to save for his retirement. He has decided that he can save 3,000 at the end of each year for the next 10 years, 5,000 at the end of each year for Years 11 through 20, and 10,000 at the end of each year for Years 21 through 30. 3. Patricia Karpas has 200,000 in savings on the day she retires. She intends to spend 2,000 per month traveling around the world for the next 2 years, during which time her savings will earn 18%, compounded monthly. For the next 5 years, she intends to spend 6,000 every 6 months, during which time her savings will earn 12%, compounded semiannually. For the rest of her life expectancy of 15 years, she wants an annuity to cover her living costs. During this period, her savings will earn 10% compounded annually. Assume that all payments occur at the end of each period. Required: 1. In Situation 1, how much will the annual scholarships be if the fund can earn 6%? How much at 10%? 2. In Situation 2, (a) How much will Charles have at the end of 30 years if his savings can earn 10%? How much at 6%? (b) If Charles expects to live for 20 years in retirement, how much can he withdraw from his savings at the end of each year if his savings earn 10%? How much at 6%? (c) How much would Charles need to invest today to have the same amount available at the time he retires as calculated in Situation 2(a) at 10%? How much at 6%? 3. In Situation 3, how much will Patricias annuity be?Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friends trust fund payments. For further instructions on present value in Excel, see Appendix C.
- Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 8% interest, how much must Amy invest today?An investor wants to accumulate $50,000 in a fund at the end of 20 years. If the investor deposit$1,000 in the fund at the end of each of the first 10 years and $1, 000 + X at the end of each ofthe second 10 years, find the value of X if the fund earns 7% effective. Do the following steps toanswer this problem: a. $1,000 are deposited in the fund at the end of each of the first 10 years. This means thatthis is an example of annuity-immediate. Compute for the accumulated value of the fund inthe first 10 years. Call this T.b. The value of the fund in the first 10 years is T . Solve for the future value of T at the end ofthe next 10 years. Use the formula Future value = P (1 + i) t. Call this answer FV . (2points)c. The target amount of the investor is $50,000. The investment made in the first 10 yearsalone will grow to the value FV at the end of 20 years. So, in the second 10 years, theaccumulated value of the investment must be $50, 000 − FV . What is this value? Call thisU .Sam Hart decides to invest $70,000 in a fund that will earn 6% annual interest, compounded semiannually. How much will his investment be worth in three years? Draw a timeline to illustrate the problem. What is the future value of your investment? (Use the present value and future value tables, a financial calculator, a spreadsheet or the formula method for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest cent, $X.XX.)
- Jane wants to create a fund today that will provide her a 4% guaranteed compounded annual rate. She wants to withdraw $15,000 one year from now and $27,000 two years from now, after which the fund will be depleted. How much must she invest today to achieve this goal? Group of answer choices $42,400.00 $40,775.89 $41,912.43 $39,386.10Elsa is planning to set-up an education fund for her daughter. She plans to invest $6,600 annually at the end of each year. She expects to withdraw money from the fund at the end of 9 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 9 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $82,418.16 $64,152.00 $47,520.00 $118,800.00 $43,022.76Suppose someone wants to accumulate $55,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $60 per month into an account with an APR of 7%. Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. A. No, because the amount that will be in the college fund, $enter your response here, is less than the goal of $55,000. B. Yes, because the amount that will be in the college fund, $enter your response here, is more than the goal of $55,000.
- A young married couple wishes to set up a fund that can be used for various home equipment purchases over the next 10 years. Their forecast is for $10,000 to be needed at the end of year 1, decreasing by $1000 each year thereafter. The fund earns 6% per year. How much money must be deposited in the fund now such that after the last withdrawal (10 years from now) the fund is depleted (balance in the account equals 0)? (Answer: $43,999)Consider the following independent situations. a. Mike Finley wishes to become a millionaire. His money market fund has a balance of $92,296 and has a guaranteed interest rate of 10%. How many years must Mike leave that balance in the fund in order to get his desired $1,000,000? b. Assume that Sally Williams desires to accumulate $1 million in 15 years using her money market fund balance of $182,696. At what interest rate must Sally’s investment compound annually?Doris plans to save $5000 per year for the next 35 years. Her money will be deposited in a stock market index fund that has a 0.5% annual management fee. If this fund earns 6% per year, how much will Doris save by investing in this fund instead of an actively managed mutual fund that has a 1% annual fee? Compute your answer as a future amount at the end of year . Assume that payments are made at the end of year. The future equivalent of savings amount at the end of year 35 is ___.