Business Fianance Homework At the end of this year you deposit $3000 into a savi
ID: 2383587 • Letter: B
Question
Business Fianance Homework
At the end of this year you deposit $3000 into a saving account. Each year you plan to increase the amount by 2%. If you can earn 5% in your savings account, how much money will you have in 20 years?
116,735
43,996
99,197
66,131.91
None of the above.
Suppose you have saved $1,000,000. You plan to withdraw money at the end of each year for the next 25 years (until you die). The bank pays 7% interest, and you expect to increase your withdrawal amount each year by the 3% inflation rate. How much can you withdraw the first year?
65,112.90
15,355.58
11,998.84
83,341.37
None of the above.
Explanation / Answer
Answer to the first question among two distinct question:
Interest rate = 5% = Year In $ Future value factors Future values 1 3000 2.5270 7580.85 2 3060 2.4066 7364.25 3 3121.2 2.2920 7153.85 4 3183.6 2.1829 6949.45 5 3247.3 2.0789 6750.90 6 3312.2 1.9799 6558.01 7 3378.5 1.8856 6370.64 8 3446.1 1.7959 6188.62 9 3515.0 1.7103 6011.81 10 3585.3 1.6289 5840.04 11 3657.0 1.5513 5673.18 12 3730.1 1.4775 5511.09 13 3804.7 1.4071 5353.63 14 3880.8 1.3401 5200.67 15 3958.4 1.2763 5052.08 16 4037.6 1.2155 4907.73 17 4118.4 1.1576 4767.51 18 4200.7 1.1025 4631.30 19 4284.7 1.0500 4498.98 20 4370.4 1.0000 4370.43 Total 116735.03-AnsRelated Questions
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