1. Assume you drink one coffee per day, 5 days a week. Assume coffee price is $4.00. That makes it $20 per week and $80 per month. Assume you can invest $80 per month in the stock market and assume you can earn 1 % per month on your stock investment.
a. At your retirement, when you are 65 years old, how much will you have in your account if you switch from coffee drinking to investing in the stock market?
b. Assume that when you get to 65 (retirement age) you switch your funds from stock market investment to bond market investment. Assume you can earn 7% on your bond investment. You decide to withdraw a constant amount each year for the next 20 years when you get to retirement age. How much will be your annual withdrawal from age 66 to 85 (Nothing left at 85) if you switch your coffee drinking to stock and bond investments.
2. You are short on cash and go to a shark loan store. You borrow $300 and agree to pay them $330 in 12 days.
a. What is the APR?
b. What is the effective annual interest for you?
Instructions
Use current age of 37. Will retire at the age of 65 (28 Years) Submit all the work in an excel document with formula