Question: Two friends Abe and Betty are planning for their retirement
Two friends, Abe and Betty, are planning for their retirement. Both are 20 years old and plan on retiring in 30 years with $1 million each. Betty plans on making annual deposits beginning in one year (total of 30 deposits) while Abe plans on waiting and then depositing twice Betty’s deposits. If both can earn 5 percent per year, how long can Abe wait before he has to start making his deposits?
Answer to relevant QuestionsYou are planning on buying your first home and need to borrow $250,000 from the bank. The manager offers you two mortgages: the long option will take 25 years to be paid off, and your annual payments will be $17,738. The ...Calculate the effective annual rates for the following:a. 24%, compounded dailyb. 24%, compounded quarterlyc. 24%, compounded every four monthsd. 24%, compounded semi-annuallye. 24%, compounded continuouslyf. Calculate the ...Roger has his eye on a new car that will cost $20,000. He has $15,000 in his savings account, earning interest at a rate of 0.5 percent per month.a. How long (to the nearest month) will it be before he can buy the car?b. How ...Josephine needs to borrow $180,000 to purchase her new house in Yarmouth, Nova Scotia. She would like to pay off the mortgage in 20 years, making monthly payments. For the initial three-year term, Providence Bank has offered ...An investment promises to pay you $100 per year starting in five years. The cash flow from the investment is expected to increase by 3 percent per year forever. If alternative investments of similar risk earn a return of 9 ...
Post your question