6-13 Soln to H2

6-13 Soln to H2 - Yearly Income Percentage Saved Yearly...

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Homework 3, Part (i): No Growth Without MBA With MBA Yearly Income $117,000.00 Yearly Income $144,000.00 Percentage Saved 15% Percentage Saved 15% $17,550.00 $21,600.00 Years in Working Life 35.00 Years in Working Life 33.00 Average yearly Return on Savings 5% Average yearly Return on Savings 5% 16.37 16.00 287,367.11 345,655.06 1,585,121.39 1,729,377.45 Cash Out Flows With MBA Loan at t=0 $(54,000.00) Loan at t=1 $(54,000.00) (581,545.62) 1,147,831.83 Homework 2, Part (ii): Growth at Different Rates Without MBA With MBA Yearly Income $117,000.00 Yearly Income $144,000.00 Growth Rate for Income 4.50% Growth Rate for Income 6.75% Percentage Saved 15% Percentage Saved 15% $17,550.00 $21,600.00 $16,794.26 $20,234.19 Years in Working Life 35.00 Years in Working Life 33.00 Average yearly Return on Savings 5% Average yearly Return on Savings 5% 0.4785% -1.6393% 32.16 44.25 540,031.69 895,368.02 2,978,823.13 4,479,694.99 Fees Loan at t=0 $(54,000.00) Loan at t=1 $(54,000.00) (581,545.62) 3,898,149.37 Yearly Savings, S Yearly Savings, S AF (5%, 35) AF (5%, 33) PV 0 (Savings) = S*AF (5%, 35) PV 2 (Savings) = S*AF (5%, 33) PV 35 (Savings) = [ PV 0 (Savings) ]*(1.05 35 ) PV 35 (Savings) = [ PV 2 (Savings) ]*(1.05 33 ) PV 35 (Cash Out Flows) PV 35 (Savings Net of Cash Out Flows) Yearly Savings at t=1, S 1 Yearly Savings, S Artifical Construct for Computation, S 0 = S 1 / (1+g) Artifical Construct for Computation, S 0 = S 1 / (1+g) Artifical Construct for Computation, q = (r-g) / (1+g) Artifical Construct for Computation, q = (r-g) / (1+g) AF (0.4785%, 35) AF (-1.6393%, 33) PV 0 (Savings) = S 0 *AF (.4785%, 36) PV 2 (Savings) = S*AF (5%, 33) PV 35 (Savings) = [ PV 0 (Savings) ]*(1.05 35 ) PV 35 (Savings) = [ PV 2 (Savings) ]*(1.05 33 ) PV 35 (Fees) PV 35 (Savings Net of Other Cash Flows)
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Beginning Balance Amount Saved during year Ending Balance Check [1] [2] [3] = [6] from last year [4] [6] = [3] + [4] + [5] 0 8/31/2008 $- $- $- $- 1 8/31/2009 $- $17,550.00 $- $17,550.00 2 8/31/2010 $17,550.00 $17,550.00 $877.50 $35,977.50 3 8/31/2011 $35,977.50 $17,550.00 $1,798.88 $55,326.38 4 8/31/2012 $55,326.38 $17,550.00 $2,766.32 $75,642.69 5 8/31/2013 $75,642.69 $17,550.00 $3,782.13 $96,974.83 6 8/31/2014 $96,974.83 $17,550.00 $4,848.74 $119,373.57 7 8/31/2015 $119,373.57 $17,550.00 $5,968.68 $142,892.25 8 8/31/2016 $142,892.25 $17,550.00 $7,144.61 $167,586.86 9 8/31/2017 $167,586.86 $17,550.00 $8,379.34 $193,516.20 10 8/31/2018 $193,516.20 $17,550.00 $9,675.81 $220,742.01 11 8/31/2019 $220,742.01 $17,550.00 $11,037.10 $249,329.11 12 8/31/2020 $249,329.11 $17,550.00 $12,466.46 $279,345.57 13 8/31/2021 $279,345.57 $17,550.00 $13,967.28 $310,862.85 14 8/31/2022 $310,862.85 $17,550.00 $15,543.14 $343,955.99
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This note was uploaded on 02/12/2012 for the course UGBA 101A taught by Professor Mccullough during the Spring '08 term at Berkeley.

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6-13 Soln to H2 - Yearly Income Percentage Saved Yearly...

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