hw2 - Annual interest rate 5% Year option A option B 1 1000...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Annual interest rate 5% Year option A option B 1 1000 2 1000 3 1000 4 1200 5 1200 15000 6 1200 7 1200 8 1200 9 1200 10 1200 11 1200 12 1200 13 1200 NPV $10,727.64 $11,752.89 Answer : Option A is considered end of the fourth year. Option B A one-time lump-sum payment of $15,000 at the end of the fifth year. Given that James present balance in the pension plan is $338,000, and that the monthly rate the plan is Pension Savings Today (present balance) 338000 Annual desired payout 300000 Number of years untill retirement 21 Interest Rate 0.75 payout years after retirement 15 present value today of all future retirements $699,841.68 Annual payment untill retirement $144,858.28 2. James, who has just turned 45, wants to invest a monthly fixed amount in his pension plan, so that wh expected to yield is 0.75%, what is the monthly sum James has to save?...
View Full Document

Page1 / 9

hw2 - Annual interest rate 5% Year option A option B 1 1000...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online