Problem: Required: For each of the following questions please use the Future/Present Value tables in the text showing your calculations.
You must show calculations to get full credit. please show formulas and full calculation.
- Jake is saving for his college education. He decides to deposit $18,000 at the end of each year for a 7 year period earning an annual interest rate of 9% per year. He will need $155,000 for his tuition when he begins school in 7 years. Will he have enough? What will be the shortfall or excess amount?
- Sam would like to retire. He wants to withdraw $23,000 at the end of each year for the next 20 years, after which he assumes that he will have left this earth. How much must Sam have in his retirement account at the time he retires if he is able to earn 6% on his retirement fund?
- Sam as question # 4 above, but Sam now wishes to withdraw the initial payment of the 1st day of the year instead of the last day.
- Morgan decides to deposit a $21,000 gift from her grandmother into the bank. She will earn 8% annual interest compounded semi-annually. How much money will Morgan have 15 years from now?
- The Andrew Company has decided to issue a 10 year, 7%, $3,000,000 term bond on June 1, 2017, paying annual interest with the first interest payment due June 1, 2018. At the time the market rate for similar bonds is 7%. You have been asked to establish the selling price of the bond.