Question

(6-2) You are planning to make a series of deposits for an anticipated expense in the future. You will deposit $5,000 next year, $4,000 in five years, and $3,000 eight years from today. If the interest rate is 4.50%, how much will you accumulate in ten years? (6-3) You want to establish a perpetuity that will pay $20,000 per year forever. If the rate is 3.75%, how much must you deposit today to establish this perpetuity? (6-4) You have saved $175,000 and you want to establish a perpetuity. If the rate is 2.50%, how many dollars per year can you withdraw from the account forever?

Show step by step how to solve

Correct ANSWERS:

6-2 $15,691.28

6-3 $533,333.33

6-4 $4,375.00

Answer 1

6-2)

D157 X fx =C157*B157 A B C D 155 Year Cash flows [email protected]% Future value 1560 $ - 1.5530 $ 157 1 $ 5,000 1.4861 $ 7,430.48 158 21 $ - 1.4221 $ 159 3 $ - 1.3609 $ 160 4 $ - 1.3023 $ 5 $ 4,000 1.2462 $ 4,984.73 162 6 $ - 1.1925 $ 163 7 $ - 1.1412 $ 164 8 $ 3,000 1.0920 $ 3,276.08 1659 $ - 1.0450 $ 166 10 $ - 1.0000 $ 167 168 Value in 10 years $ 15,691.28 161

Please rate thumbs up