Section 2: Problem solving questions (Demonstrate your caleletion steps to reeiv

Question

Section 2: Problem solving questions (Demonstrate your caleletion steps to reeive partial nd fell credi M25, PS (12 points: You just received $225 000france setlement You hve invest ik for your retirement. Curenty, you goal i to netire 25 years from today Hoe machts will you have io yoar aecet dhis money aside and on the day you retire if you can earn an average returs of 10.5 pencent raher than tpercenr tiple choice questions; (Enter your answer below, A.B.C.D orE 10I M11 M21 M31 M32 M33 M34 M35 M36 M37 M38 M39 441 MI2 M13 M14 MIS M23 M43 M44 M45 M46 447 M48 M24 Mi6 M26 MI7 MI8 MI9 M28 M49 M30 M50

Explanation / Answer

If the interest would have been 10.5%, then the amount would have become after 25 years =

= 225000*(1.105)^25

And to have that same amount after 25 years, with an interest rate of 8%, we need to invest:

= (225000*(1.105)^25)/(1.08^25)

= 398699.4

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