who can help me to answer these question: A- Assume that $20,000 can earn 10% pe
ID: 1211469 • Letter: W
Question
who can help me to answer these question:
A-
Assume that $20,000 can earn 10% per year compounding semiannually. How much money can be withdrawn at the end of each year indefinitely from this account (i.e. there will always/forever be $20,000 in the account at the end of each year)?
B-
An infamous Bears quarterback just renegotiated his contract for his next 5 seasons. The contract was for a total of $50 million, paid in equal installments of $10 million for each of the following five years. A wide receiver, envious of the quarterback, demanded his contract also be renegotiated. The wide receiver was able to obtain a $48.5-million package which included $11 million upfront (paid NOW) and $7.5 million annually for 5 years. Both claimed they got a better deal. Who actually did get a better deal? Assume an interest rate of 5% per year.
Explanation / Answer
Answer for A is nothing but to calculate the annual interest amount on 20000.
A = 20000(1+0.05)2
2050 is the interest earned. So by taking away that 2050 every year, you can see $20000 in your account forever.
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