Reference no: EM132546498
1. Retirement Planning. A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8 percent interest on retirement savings.
a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year.
b. How would the answer to part (a) change if the couple also realizes that in 20 years, they will need to spend $60,000 on their child's college education?
2. Your younger sister, Susie, will start college in five years. She has just informed your parents that she wants to go to Collegiate U., which will cost $ 8,000 per year for four years (assumed to come at the end of end year). Anticipating Susie's ambitions, your parents started investing $ 1,000 per year five years ago and will continue to do so for five more years.
How much more will your parents have to invest each year for the next five years to have the necessary funds for Susie's education? Use 10 percent as the appropriate interest rate throughout this problem (for discounting or compounding).
3. ABC corporation has issued 12 percent annual coupon 1000 Rupees par value bonds maturing in 10 years. What should be the current price of this bond if the interest rate is 15 percent?
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: Retirement Planning. A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last
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