Question

Then answer the following questions:
1. At age 60, you find that your employer is moving to another location. You receive termination pay of $600,000. You have some savings and wonder whether to retire now.
a. If you invest the $600,000 now at 8%, compounded annually, how much money can you withdraw from your account each year so at the end of 5 years there will be a zero balance?
b. If you invest the $600,000 now at 10%, compounded annually, how much money can you withdraw from your account each year so at the end of 5 years there will be a zero balance?
2. At 16%, compounded annually, which of the following plans is more desirable in terms of present value? Show computations to support youranswer.


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  • CreatedFebruary 20, 2015
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