Question: I need help to on how to solve these questions in Business Mathematics At the age of 3 0 , Morgan decided to create a
I need help to on how to solve these questions in Business Mathematics
At the age of Morgan decided to create a financial plan to retire in years. He had the following retirement objectives:
Home purchase objective: Own a home worth at least $ with no mortgage.
Vacation objective: Have an amount of $ for a European tour.
Monthly allowance objective: Receive a monthbeginning allowance of $ for years after retirement.
He created the following financial plans to achieve the above retirement objectives. Answer the questions related to each plan.
Plan to achieve his home purchase objective
Assuming that the value of a property in a Toronto suburb would double over years, Morgan would purchase a house worth $ by making a downpayment of $ and obtaining a mortgage for the balance amount from a local bank at an interest rate of compounded semiannually for years.
a If the interest rate is constant over the year period, calculate the monthend payments for the mortgage. What
would be his total investment in the house over the term?
Plan to achieve his vacation objective
Deposit $ at the end of every month for ten years into a savings account that earns compounded monthly. At the end of the ten years, transfer the accumulated money into an investment fund that earns compounded quarterly, and allow the money to grow in this fund until retirement.
b How long in years and months would it take to accumulate the required amount of $ to pay for his vacation?
c To ensure that the amount accumulates to only $ at the time of retirement, by how much should he change his
monthly deposit?
Plan to achieve his monthly allowance objective:
He will save $ at the beginning of every month until retirement in an RRSP that has an interest rate of compounded monthly.
d What would be the accumulated value of the RRSP at the time of retirement?
e For Morgan to be able to withdraw $ from the RRSP at the beginning of every month during his planned year retirement period, what does the nominal interest rate, compounded monthly, need to change to assuming the interest rate during the year savings period remains unchanged at compounded monthly?
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