A business is considering purchasing a machine that is projected to yield cash,
ID: 2553481 • Letter: A
Question
A business is considering purchasing a machine that is projected to yield cash, savings of $1.000 per year over a 10-year period. Using a 12 percent discount rate, calculate the present value of the savings. Assume that the cash savings occur at the end of each year) 3. 4. Yolanda William is 35 years old today and is beginning to plan for her retirement. She wants to set aside an equal amount at the end of each of the next 25 years so that she can retire at age 60. She expects to live to an age of S0 and wants to be able to withdraw $50.000 per year from the account on her 61 through soh birthdays. The accont is expected to eam 10 percent per year for the entire period of time. Determine the size of the annual deposits that she must make.Explanation / Answer
Question 3.
Savings = $ 1000 / year
Period = 10 Years
Discount Rate = 12%
Present Value = Future Value x ( PVF, r, n )
= $ 1000 ( PVF 12%, 10 Years)
= $ 1000 x 0.32197
= $ 321.79
Question 4.
Amount needed in account on 60th Birthday
= $ 50000(PVAF 10%, 20Years)
=$ 50000 x 8.514
= $ 425700
Annual Deposit that she must make
FVAN25 = PMT(FVIFA, 10%,25 Years)
$ 425700 = PMT x 98.347
PMT = $ 425700 / 98.347
= $ 4,329
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