Assume that you inherited $100,000 from your grandparents, today. You have exactly 20 years to retire and
Question:
Assume that you inherited $100,000 from your grandparents, today. You have exactly 20 years to retire and you decided to put the entire amount into 20 years, 4% annual interest annuity.
1)(10 pts) Assuming you did not deposit any additional amount into this account, compute your account balance by the time you retire, using the annuity calculator. Then, compute the same using a scientific calculator (not a financial one) using the appropriate formulas from the textbook and show your calculations. (Make sure the amounts are the same!)
2)(10 pts)Now assume that in addition to this initial $100,000, you also contributed $500 at the end of each month until you retire. Compute your retirement account balance using the annuity calculator. Highlight the end balance, total principal, and total interest.
3) (30 pts) Now, using the relevant formulas from the textbook and a scientific calculator, reproduce the results (End Balance, Total Principal, Total Interest) showing your calculations. Highlight any issue one has to pay attention to calculating those values.Please use the formulas with the periodic rate inserted. Explain how the periodic rate is obtained.
4) (30 pts) Finally, assume that the contributions were made at the beginning of each month. What are the above three values now? Show your computations to reproduce those values with a scientific calculator and highlight the formulas used.Please use the formulas with the periodic rate inserted. Explain how the periodic rate is obtained.
5) (20 pts) Now, look at the first row of the "Annual Schedule" table[continue from (4)] provided by the calculator (just under the graph): Copy the last three values(Interest, End Balance, End Principal). (The values as of the end of the first year.)
Please explain, using appropriate formulas, how those values are computed. (Do not explain assuming the use of a financial calculator.)