Chapter 5 lecture

Retirement reference example reference file

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Unformatted text preview: In your client’s investment until her expected retirement in year 20. retirement Reference (Example): Reference File: Pfe_chap05.xls File: Worksheet: “page 79” 6 Annuities • Series of equal periodic payments • Example: – You give yourself a Christmas gift of $50 You each year for the next five years each • Each year, you deposit that money on January Each 1 on a money market account, paying a fixed 4% return 4% • At the end of the 5th year, how much do you have on the account? have 7 Annuities – Note: This is an annuity due, as opposed to Note: an ordinary annuity an Reference (Example): Reference File: Pfe_chap05.xls File: Worksheet: “page 80, bottom” 8 The FV function – An easier way to get the Future Value of an An annuity (see also page 11) annuity 9 Annuity Example – Assume that you smoke a pack of Assume cigarettes per week, paying $4.50 per pack cigarettes – You are considering quitting, and investing You the money in the stock market instead the • Historical long-term average stock market in Historical the U.S. is about 12% the • How much money will you have in your How investment account after 10 years? investment – (we are assuming a fixed price on cigarettes into the (we future, no t...
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