Business

FinanceQ&A LibraryYou are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,500 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,000 every year for 30 years. Plan 3 starts after 20 years and puts away $4,000 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 10%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years?Start your trial now! First week only $4.99!*arrow_forward*

Question

You are a new employee with the Metro Daily

Planet.

The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts
$1,500

away in your retirement account at the end of every year for
40

years. Plan 2 starts after 10 years and puts away
$2,000

every year for
30

years. Plan 3 starts after 20 years and puts away
$4,000

every year for the last
20

years of employment. All three plans guarantee an annual growth rate of
10%.

a. Which plan should you choose if you plan to work at the Planet for

40

years?b. Which plan should you choose if you plan to work at the Planet for only the next

30

years?c. Which plan should you choose if you plan to work at the Planet for only the next

20

years?d. Which plan should you choose if you plan to work at the Planet for only the next

10

years?e. What do the answers in parts (a) through (d) imply about savings?

Tagged in

Business

Finance

Find answers to questions asked by students like you.

Q: Please answer all parts (a-e) with explanations thx

A: Click to see the answer

Q: Juan Garza invested $20,000 10 years ago at 12 percent, compounded quarterly. How much has he accumu...

A: Future value = Amount invested *(1+rate/n)N*no of years where n is no of compounding periods

Q: FULL QUESTION: Kinky Copies may buy a high-volume copier. The machine costs $100,000 and this cost...

A: NPV is the net current worth of cash outflows and cash inflows. It is calculated by subtracting the ...

Q: If you earn 5% per year on your bank account, how long will it take an account with $110 to double t...

A: The present value is the present worth of the amount that is paid or received in the future.

Q: Stock A has a risk premium of 8.67 percent. If Treasury bills yield 2.3 percent, the required rate o...

A: According to CAPM model: Rs=Rf+beta×Rm-Rf where, Rs= required return of stock Rf = Risk free rate Rm...

Q: Investing: Lesser-Known Stocks The following question is based on the following information about ...

A: In the given question, We need to find how many shares purchased on each stocks x,y,z are no: of sh...

Q: A firm has a stock price of $54.75 per share. The firm's earnings are $75 million and the firm has 2...

A: PEG ratio displays the relationship between the Earnings growth and the P/E ratio over a specific pe...

Q: You want to be able to withdraw $1,000 from a savings account at the end of year 1, with withdrawals...

A: The present value of a growing annuity is the current value of an annuity which is growing at a cert...

Q: The First National Bank is offering a 3 year certificate of deposit (CD) at 4% interest compounded q...

A: Here, First National Bank Second National Bank Investment $7,000 $7,000 Interest Rate (r) 4...

Q: Convert the given time period to years, assuming a 360-day year. 9 months

A: In 360 days convention every month is assumed to have 30 days

Q: You are a CFO of an Australian company with a liability of USD 1 million due in December 2021. You h...

A: Liability of the company payable in December 2021 is $ 1 Million Receivable due to the Company in De...

Q: The city of Oak Ridge is evaluating three mutually exclusive landscaping plans for refurbishing a pu...

A: Benefit-Cost Ratio is used to analyse the total benefit obtained from the relative cost incurred. It...

Q: Please answer all 4 prices with explanations thx

A: Formulas:

Q: You deposit $1,000 in an account at the Lifelong Trust Savings and Loan that pays 7% interest compou...

A: The provided information are: Interest rate compounded quarterly =7% = 0.07 Time period (n) = 10 yea...

Q: You are given the following information about a portfolio consisting of stocks X, Y, and Z: Stock In...

A: The provided table is: Stock Investment Expected return X 10,000 8% Y 15,000 12% Z 25,000 1...

Q: Kindly explain with details using ALGEBRA not excel What is the accumulated value of periodic deposi...

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM (tim...

Q: Can you complete parts a through d for me?

A: a. Annual Percentage Yield APY =[ (1+r)^n - 1] APY = [(1+0.015)^12-1] APY =[1.1956...

Q: Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase th...

A: The net present value is a capital budgeting technique used to determine the acceptability of the pr...

Q: The cost of a high-quality 250-horsepower compressor was $9500 when recently purchased. What would a...

A: Click to see the answer

Q: The rate of inflation for the next 12 months (Year 1) is expected to be 1.4 percent; it is expected ...

A: Given data; inflation rate in year 1 = 1.4% inflation rate in year 2= 1.8% inflation from year 3 = ...

Q: use excel/show excel formula answering the following LO2 28. Project Analysis McGilla Golf has deci...

A: IRR is the minimum return required in investment. It should be more than the cost of capital for a p...

Q: #5 Hy Potenuse bought a $10,000 T-bill at a 0.115 percent discount rate for 13 weeks (91 days). How...

A: T-Bill or Treasury Bill is short-term debt instrument which is used by government to borrow from pub...

Q: What is the value of a preferred stock thst pays an annual dividend of $4.50 a share and competitive...

A: Preferred stock are the stock which has property of both common stock and debt. It has higher claims...

Q: Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase th...

A: Net present value is the difference between the discounted value of cash outflows and discounted val...

Q: If you buy a computer directly from the manufacturer for $2,509 and agree to repay it in 60 equal in...

A: This is the case of present value of annuity. Annuity is equal stream of cashflow at regular interva...

Q: The ABC company is considering constructing a plant to manufacture a proposed new product. The land ...

A: Let Y be the minimum annual sales for 12years Annual cost: Y + appreciated value on land Land: P30,0...

Q: #7 The face value of a simple interest note and blank discount note is $8,000 each. Assume both no...

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for yo...

Q: The financial success of the Downhill Ski Resort in the Blue Ridge Mountains is dependent on the amo...

A: Investment decisions pertaining to long-term assets for the purpose of generating revenue for the bu...

Q: Rita Gonzales won the $41 million lottery. She is to receive $1.5 million a year for the next 19 yea...

A: Current value is winnings is present value of future payments

Q: Denise Adams Company Limited (DACL) complete the fiscal period of 2019 with revenue of $10M with a t...

A: Information provided: Revenue = $10M Total assets = $12M Equity share holders = $8.5M Net profit bef...

Q: You invest $17,000 at 6% interest, compounded monthly, for 2 years. Use the compound interest formul...

A: Compound interest is given by the following formula A = P0 *(1+r100)n where P0 - principalA - amou...

Q: What is the future value of a constant income stream of $20,000 per year in 6 years from now given a...

A: Given information: Constant income stream of $20,000 Number of years is 6 Interest rate is 3.5%

Q: A corporate bond pays 5% of its face value once per year. If this $5,000 10-year bond sells now for ...

A: Bonds are financial instruments which provide fixed returns to its holders. Bonds actually have a na...

Q: HW#3 Consider a coupon bond that has a $1,000 par value and a coupon rate of 10%. The bond is cur...

A: Note : As per the guidelines of Bartleby , only 2 questions can be answered 1. Calculating a bond'...

Q: You are interested in leasing a car for $425 per month, due at the beginning of each month. Using an...

A: The Present Value of an amount is the present worth an amount in a future date. The present value of...

Q: A customer of your bank comes for a car loan 10000 OMR. He is charged with an interest rate of 5% pe...

A: Calculation of Monthly Payment of Loan (EMI) Monthly Payment (A) = Principal * [r(1+r)^N/(1+r)^N-1} ...

Q: Explain carefully why Blacks approach to evaluating an American call option on a dividend-paying sto...

A: The Black's approach in finance is considered to be a very popular method for computing american cal...

Q: Answer in excel format and explain formulas used.

A: Just paid Dividend (D0)= 1 Growth rate for 3 years = 12% Growth rate for 4-5 years = 5%

Q: 1. John’s goal in life is to be a millionaire. He has $6,980 in a saving account and figure he is li...

A: This is the question of time value of money, which state money received today is more worth than mon...

Q: Westsyde Tool Company just paid a dividend of $2.00. The risk-free rate of return is 6% and the expe...

A: A model that helps to evaluate the value of the stock with the assumption that the dividend will gro...

Q: Estimate the approximate after-tax rate of return (ROR) for a project that has a before-tax ROR of 2...

A: Rate of return measures the net gain or loss of the investment over a given specified period of the ...

Q: RealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the e...

A: Capital Budgeting is a technique that helps to analyze the profitability of the project.

Q: Present value of an ordinary annuity. Fill in the missing present values in the following table for ...

A: Present Value of annuity = P*{1-{1/[(1+r)^n]}/r} Where, P= Annuity r = annual interest rate n = no. ...