3. Suppose that you are going to save $4,000 of your income for one year, after...
Lynn Swartz's husband died 3 years ago. Her parents, who have income of over $200,000 per year, want to ensure that funds will be available for the education of Lynn's 8-year-old son, Eric. Lynn is currently earning $45,000 a year. Lynn's parents have suggested that they start a savings account for Eric. They have calculated that if they invest $4,000 per year for the next 8 years, sufficient funds will be available at the end of 10 years for Eric's...
Last year, you graduated from University with a diploma in Business Management and were able to get a full-time job immediately after graduation. After working for one year, you have $10,000 of savings! This happens to be the same amount that is outstanding on your student loan, so you are thinking about paying off your student loan fully. However, you are also considering a few other options for either spending or investing your savings. First, you think that it might...
You are trying to decide how much to save for retirement. Assume you plan to save $4,000 per year with the first investment made one year from now. You think you can earn 7.0% per year on your investments and you plan to retire in 45 years, immediately after making your last $4,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $4,000 per year, you wanted to...
skipping your daily Starbucks fix would save you $180 per month. If you invested those savings in a retirement account earning 0.25% per month compound interest, you would have an additional $166,691 saved up by time you retire. Assuming you will live 20 years after retiring, how much additional monthly income will this provide you in your retirement
Suppose you think Apple stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $50, and a call option expiring in one year has an exercise price, X, of $50 and is selling at a price, C, of $9. With $18,900 to invest, you are considering three alternatives. Clarification: Calculate the value of the options assuming that you exercise them when you calculate the portfolio value (i.e. six months from now)...
Suppose you decide to save 10% of your net monthly income. Find this amount. Monthly Savings = $270.00 If you invest this money in an account that compounds monthly with an APR of 2.5%, how much will you have saved i) after 1 year? ii) after 3 years?
Individual retirement accounts (IRAs) were established by the U.S. government to encourage saving. An individual who deposits part of current earnings in an IRA does not have to pay income taxes on the earnings deposited, nor are any income taxes charged on the interest earned by the funds in the IRA. However, when the funds are withdrawn from the IRA, the full amount withdrawn is treated as income and is taxed at the individual’s current income tax rate. In contrast,...
4. In a previous homework, we learned that skipping your daily Starbucks fix would save you $180 per month. If you invested those savings in a retirement account earning 0.25% per month compound interest, you would have an additional S166,691 saved up by time you retire. Assuming you will live 20 years after retiring, how much additional monthly income will this provide you in your retirement?
Suppose you think Apple stock is going to appreciate substantially in value in the next year. Say the stock's current price, Se, is $40, and a call option expiring in one year has an exercise price, X, of $40 and is selling at a price, C, of $15. With $15,000 to invest, you are considering three alternatives. a. Invest all $15,000 in the stock, buying 375 shares. b. Invest all $15,000 in 1,000 options (10 contracts). c. Buy 100 options...
Suppose you think Apple stock is going to appreciate substantially in value in the next year. Say the stock's current price, Se, is $50, and a call option expiring in one year has an exercise price, X, of $50 and is selling at a price, C, of $16. With $20,800 to invest, you are considering three alternatives. a. Invest all $20,800 in the stock, buying 416 shares. b. Invest all $20,800 in 1,300 options (13 contracts). c. Buy 100 options...