In this project, you play the role of a financial advisor. In particular, you will advise...
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In this project, you play the role of a financial advisor. In particular, you will advise a client regarding her annuities. Let (r) represent the rate of payment (income received) in dollars per year at time r. Income received at a rate of ft) over a time period is called an annuity (or income stream). The future value, FV, of a present value, PV, compounded continuously, at an annual percentage rate, APR, of r, for t years is FV = PV-ert 1. The formula for the future value of an annuity over time period [0, 7] is given by FV = fer-t) f(t)dt. If your client intends to contribute $250 per month for 35 years with a 9% rate of return, then find the future value of your client's annuity. 2. The present value (the amount you need to have now in order to make future payments of a given amount) of an annuity is the current value of a series of payments to be made at specified future times for a specified time period, given some rate of return, r, on the annuity principal during the time period. The formula for the present value is FV = f et f(t)dt. If your client already has an annuity that is invested at 6% APR, and she needs the annuity to pay out $1000 per month for 20 years then find the present value of that annuity. 3. Contributions to an annuity are usually a percentage of your salary, and rates of return vary. Referring to Question 1, consider your client's $250 per month contribution, increased by 5% per year for 35 years at 8%, compounded continuously. What will then be the value of the annuity? In this project, you play the role of a financial advisor. In particular, you will advise a client regarding her annuities. Let (r) represent the rate of payment (income received) in dollars per year at time r. Income received at a rate of ft) over a time period is called an annuity (or income stream). The future value, FV, of a present value, PV, compounded continuously, at an annual percentage rate, APR, of r, for t years is FV = PV-ert 1. The formula for the future value of an annuity over time period [0, 7] is given by FV = fer-t) f(t)dt. If your client intends to contribute $250 per month for 35 years with a 9% rate of return, then find the future value of your client's annuity. 2. The present value (the amount you need to have now in order to make future payments of a given amount) of an annuity is the current value of a series of payments to be made at specified future times for a specified time period, given some rate of return, r, on the annuity principal during the time period. The formula for the present value is FV = f et f(t)dt. If your client already has an annuity that is invested at 6% APR, and she needs the annuity to pay out $1000 per month for 20 years then find the present value of that annuity. 3. Contributions to an annuity are usually a percentage of your salary, and rates of return vary. Referring to Question 1, consider your client's $250 per month contribution, increased by 5% per year for 35 years at 8%, compounded continuously. What will then be the value of the annuity?
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Answer rating: 100% (QA)
1 The future value of the annuity is given by the formula FV e17t ftdt FV e17t 250dt FV e1... View the full answer
Related Book For
International Human Resource Management
ISBN: 978-1408032091
6th edition
Authors: Peter Dowling, Marion Festing, Allen Engle
Posted Date:
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