Question: I need help with question number 6 (a & b) of case 2. Book: Cases in Financial Management Authors: John S. Dunkelberg & Joseph M.
SOFTWARE QUESTION 6. Studebaker has carefully analyzed how much he can afford to invest. He has decided that (1) he has $40,000 of "excess cash" and (2) his annual after-tax income could drop by $4,500 per year without any "lifestyle disruptions." (a) Redo your answer to question 2 assuming that the before-tax money market rate is 5 percent per year and interest is compounded monthly. (b) Redo your answers to questions 3 and 4 assuming that the SPA earns 7 percent per year, and the TDA pays 7.5 percent in years 1-10 and 6.5 percent in years 11-20. SOFTWARE QUESTION 6. Studebaker has carefully analyzed how much he can afford to invest. He has decided that (1) he has $40,000 of "excess cash" and (2) his annual after-tax income could drop by $4,500 per year without any "lifestyle disruptions." (a) Redo your answer to question 2 assuming that the before-tax money market rate is 5 percent per year and interest is compounded monthly. (b) Redo your answers to questions 3 and 4 assuming that the SPA earns 7 percent per year, and the TDA pays 7.5 percent in years 1-10 and 6.5 percent in years 11-20
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