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**Unformatted text preview: **price of oil is $14 per barrel? 4. Sam is a manager who earns $50,000 this year. He expects his wage to increase by 4% each year. He plans to retire in 20 years, and he wishes to accumulate $300,000, in real terms, when he retires. Assuming interest rate is 5% and inflation is 2%, calculate: (a) The amount he needs to save if he wishes to save a constant dollar amount for the next 20 years. (b) The fraction of income he needs to save if he saves a constant fraction of his income each year. Ignore the effect of all taxes. 5. You can invest in a project that pays you $1 at the end of 1 year, $2 at the end of two years, etc., until paying $10 at the end of 10 years. The opportunity cost of the project is 15%. How much are you willing to invest in such a project today?...

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