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adms_3530_assignment_1_fall_2012_solution

23 value of the 15000 that went into retirement

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Unformatted text preview: 0,000 1.04 0.04 1 . $ 240122.14 The value of the retirement fund in year 20: . , . , . Page 11 of 18 Withdrawals: Present Value of the $15,000 withdrawals: 30 0 0.03 $15,000 1 ?? 1 1 15,000 1 0.03 1 0.03 1.03 15,000 19.60044135 $294006.62 World Tour Expense: $100,000 Total Withdrawals = $ , Savings – Withdrawals = $ . $ , , . $ They do not have enough for retirement. $ $ , , , . . . $ , . more is required. Page 12 of 18 #5a) 1 0 18% 0.18 1 1 1 1,000 0.18 12 ?? 1 0.195618171 The effective interest rate is 19.56% 1 1,000 1.195618171 1,195.62 1,000 1,195.62 195.62 The interest paid is $15.62 more than $180. #5b) Inflation rate = 2%= 0.02 1 1 1 1.195618171 1.02 1 0.172174677 The real rate is rate is 17.2175% Page 13 of 18 #6a) 5% 0.05 5%/2 0.05/2 0.025 First Ph...
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