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

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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?...
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## This note was uploaded on 04/14/2011 for the course FIN 624 taught by Professor Alan during the Spring '11 term at NJIT.

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

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