Question

Use future or present value techniques to solve the following problems.
a. Starting with $15,000, how much will you have in 10 years if you can earn 6 percent on your money? If you can earn only 4 percent?
b. If you inherited $45,000 today and invested all of it in a security that paid a 7 percent rate of return, how much would you have in 25 years?
c. If the average new home costs $275,000 today, how much will it cost in 10 years if the price increases by 5 percent each year?
d. You think that in 15 years, it will cost $212,000 to provide your child with a 4-year college education. Will you have enough if you take $70,000 today and invest it for the next 15 years at 5 percent? If you start from scratch, how much will you have to save each year to have $212,000 in 15 years if you can earn a 4 percent rate of return on your investments?
e. If you can earn 4 percent, how much will you have to save each year if you want to retire in 35 years with $1 million?
f. You plan to have $750,000 in savings and investments when you retire at age 60. Assuming that you earn an average of 8 percent on this portfolio, what is the maximum annual withdrawal you can make over a 25-year period of retirement?



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  • CreatedFebruary 13, 2015
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