Reference no: EM132923080
Question - I am investing $50,000 right now and will add $8,000 each year for the next 10 years. The expected return of this investment is 6.5% per year.
(a) Compute the amount you will be expected to have at the end of the tenth year.
For each of the following sub-question, assume that only one variable of the investment is changed, while all other variables remain identical to the ones you used to compute the result of sub-question (a)
(b) Compute the amount expected at the end of the tenth year if initial investment contribution was increased by $10,000.
(c) Compute the amount expected at the end of the tenth year if you withdrew from the investment $10,000 at the end of the sixth year instead of contributing $8,000.
(d) Compute the amount expected at the end of the tenth year if the expected return becomes 3.25% compounded semi-annually and you contribute $4,000 every six months instead of $8,000 every year.
(e) Determine the amount expected at the end of the fifteenth year assuming you carry on investing $8,000 every year and the expected return for year 11 to 15 is 7%.
(f) Determine by which year your investment will reach the $100,000 mark.