1) You need $24,256 at the end of 8 years, and your only investment outlet is an 9 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. Use Appendix B and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a. What single payment could be made at the beginning of the first year to achieve this objective? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Single Payment Amount:
b. What amount could you pay at the end of each year annually for 8 years to achieve this same objective? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Amount to be paid:
2) Franklin Templeton has just invested $10,060 for his son (age one). This money will be used for his son’s education 18 years from now. He calculates that he will need $105,895 by the time the boy goes to school.
What rate of return will Mr. Templeton need in order to achieve this goal? Use Appendix B for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Rate of return:
3) You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $30,000 for 25 years after retirement. During the period before retirement you can earn 11 percent annually, while after retirement you can earn 13 percent on your money.
What annual contributions to the retirement fund will allow you to receive the $30,000 annuity? Use Appendix C and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Annual Contribution: