1. You are saving for a new house, and you put $2000 per year in an...

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1. You are saving for a new house, and you put $2000 per year in an account paying 4%. The first payment is made today. How much will you have at the end of 6 years? 2. The expected dividend is $2, and dividends are expected to grow at 4% forever. If the discount rate is 11%, what is the value of this promised dividend stream? 3. A defined-benefit retirement plan offers to pay $10,000 per year for 6 years and increase the annual payment by 5% percent each year. What is the present value at retirement if the discount rate is 10 percent? 1. You are saving for a new house, and you put $2000 per year in an account paying 4%. The first payment is made today. How much will you have at the end of 6 years? 2. The expected dividend is $2, and dividends are expected to grow at 4% forever. If the discount rate is 11%, what is the value of this promised dividend stream? 3. A defined-benefit retirement plan offers to pay $10,000 per year for 6 years and increase the annual payment by 5% percent each year. What is the present value at retirement if the discount rate is 10 percent?

Answer rating: 100% (QA)

1 To calculate the amount you will have at the end of 6 years we can use the formula for compound interest A P1 rnnt Where A the future value of the i... View the full answer