Question

**PLEASE HELP, IVE RAN CALCULATIONS ABOUT TEN TIMES**

Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $740 and has an existing customer base of 530. Paul plans to raise the annual fee by 7 percent every year and expects the club membership to grow at a constant rate of 3 percent for the next five years. The overall expenses of running the health club are $118,000 a year and are expected to grow at the inflation rate of 3 percent annually. After five years, Paul plans to buy a luxury boat for $440,000, close the health club, and travel the world in his boat for the rest of his life. Assume Paul has a remaining life of 25 years and earns 8 percent on his savings

How much will Paul have in his savings on the day he starts his world tour assuming he has already paid for his boat?

What is the annual amount that Paul can spend while on his world tour if he will have no money left in the bank when he dies?

Answer 1

A $ 740.00 530 79 3% 118,000.00 $ 8% $ 791.80 545.90 23 847.23 $ 906.53 $ 562.28 579.15 969.99$ 596.52 1,037.89 614.42 1 Annual Fee 2 Existing customer base 3 Growth in Fee 4 Growth in Customer Base 5 Expenses for running the club 6 Growth rate of expenses 7 Savings interest rate 8 9 Year 10 Annual Fee 11 Customer Base 12 13 Annual Income 14 Less: Annual expenses 15 Less: Cost of Boat 16 Annual Savings 17 Future value factor 18 Future value 19 Amount remaining in Paul's savings 20 21 Remaining life of Paul after 5 years 22 Annual amount of withdrawal $ 432,243.62 $ 476,375.69 $ 525,013.65 $ 578,617.55 $ 637,694.40 $ 121,540.00 $ 125, 186.20 $ 128,941.79$ 132,810.04 $ 136,794.34 $ 440,000.00 $ 310,703.62 $351,189.49 $ 396,071.87 $ 445,807.51 $ 60,900.06 1.36048896 1.259712 1.1664 1.08 $ 422,708.84 $442,397.62 $461,978.22 $ 481,472.11 $ 60,900.06 $1,869,456.85 $190,408.31

А 1 Annual Fee 2 Existing customer base 3 Growth in Fee 4 Growth in Customer Base 5 Expenses for running the club 6 Growth rate of expenses 7 Savings interest rate 740 530 0.07 0.03 118000 0.03 0.08 =B1*(1+B3) =B2*(1+B4) =B10*(1+$B$3) =C10*(1+$B$3) =D10*(1+$B$3) =E10*(1+$B$3) =B11*(1+$B$4) =C11*(1+$B$4) =D11*(1+$B$4) =E11*(1+$B$4) =B10*B11 =B5*(1+B6) 9 Year 10 Annual Fee 11 Customer Base 12 13 Annual Income 14 Less: Annual expenses 15 Less: Cost of Boat 16 Annual Savings 17 Future value factor 18 Future value 19 Amount remaining in Paul's savings 20 21 Remaining life of Paul after 5 years 22 Annual amount of withdrawal =C10*0111 =D10*D11 =E10*E11 =F10*F11 =B14*(1+$B$6) =C14*(1+$B$6) =D14*(1+$B$6) =E14*(1+$B$6) 440000 =C13-C14-C15 =D13-D14-D15 =E13-E14-E15 =F13-F14-F15 =(1+$B$7)^D9 =(1+$B$7)^C9 =(1+$B$7)^B9 =C16*017 =D16*D17 =E16*E17 =F16*F17 =B13-B14-B15 =(1+$B$7)^E9 =B16*B17 =SUM(B18:F18) = 25-5 =PMT(B7,B21,-B19,0)