Study Homework for Ch. 14 and 16
Time Value of Money
Inclass Examples
1. You have just graduated and begun your career in physician practice management.
You are offered a retirement plan through your company and you are trying to decide
how much money to put into the plan each year.
Beginning at age 65, you would like to
be able to withdraw $50,000 per year from your retirement savings for 10 years.
To meet
this goal, how much money will you need to put into your retirement plan per year
assuming that you can earn 10% on your investment?
Assume that you will put equal
amounts into the plan each year and the amount will not change over time.
Your
contributions to the plan will cease once you begin making withdrawals.
Assume that
you are currently 22 years old and your first payment into the plan will come at the end of
the year.
43 yrs
$307,230 = 50,000 * [(11/ (1.1)
10
]/ .10
307,230 = PMT * [(1.1)
43
 1]/.1
= PMT * 592.40
PMT = $518.62
2. BetterCare Insurance Company is considering the development of a case management
program for its insured diabetics.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '10
 Reiter
 Time Value Of Money, Net Present Value, BetterCare, case management program

Click to edit the document details