Stanley Glass plans to deposit $3,500 at the end of each year for 25 years into...
- Stanley Glass plans to deposit $3,500 at the end of each year for 25 years into his Prudential Retirement account, which earns 11% interest. How much will Stanley Glass accumulate in his retirement account, when he retires?
- Merck & Co., Inc. needs $24,034,142 for a new research and development facility to be constructed 10 years from now. The company currently has $5,000,000 to invest in such capital expenditures. At what rate of interest must it invest the $5,000,000 to fund construction of the new facility? (Round to the nearest whole percentage).
- Tesla rents an automotive facility for 7 years with annual rental payments of $5.5 million to be made at the beginning of each year. If the current market interest rate is 9%, what is the present value of Tesla’s rental payments?
Homework Answers
Answer to Question 1:
Annual deposit = $3,500
Time period = 25 years
Interest rate = 11%
Accumulated sum = $3,500*1.11^24 + $3,500*1.11^23 + … +
$3,500*1.11 + $3,500
Accumulated sum = $3,500 * (1.11^25 - 1) / 0.11
Accumulated sum = $3,500 * 114.413307
Accumulated sum = $400,446.57
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