Question: Please help with these finance problems: What is the present value of a stream of cash flows that pays $100 each year starting now until
Please help with these finance problems:
What is the present value of a stream of cash flows that pays $100 each year starting now until year 4. The next year it pays $170 per year until year 7. The year after that it pays $70 from then on forever if your interest rate is 14%?
What is the value today of a stream of cash flows that starts 3 years from now and pays $800 each year indefinitely if your best interest rate is 10.9%?
You just graduated and you have a job. You want to save using a Roth IRA since any growth is tax exempt. You are concerned about inflation, which you estimate will be 1.6% per year. The contribution limit is $6000 per year in 2020, so you plan on depositing $500 per month starting in one month until you retire 37 years from now. You estimate your retirement account will grow at about 7.6% per year while you are saving, but once you retire you will invest in safer assets that will only yield 1.6% per year. Each of these compound monthly. You plan on withdrawing from your Roth IRA each month the same amount each month in retirement as $7000 is worth today (use inflation compounded yearly to figure out the withdrawal amount). How long (in months) will your retirement savings last?
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