Reference no: EM133112709

Questions -

Q1. Jack would like to have $1.25M to retire in 35 years. He will get $375,000 the day he retires from his company's pension plan that he plans to use to collect the amount needed to retire. If he can deposit funds in a money market account which earns 6.5% interest per year, and he would like to make yearly deposits to collect the money to retire, how large should the annual deposits be?

$5,176 per year

$6,675 per year

$7,054 per year

$10,078 per year

Q2. An automobile tier II supplier has been offered a contract to supply a gearbox to a car company. The initial price of the gearbox is $389, and the car company is ready to give a contract to the supplier to supply 500,000 gearboxes in the first year, increasing by 2% every year, if the supplier is ready to bring down the price of the gearbox every year by $7.50 over the 12-year life of the contract. How much is the contract worth to the supplier at 6% interest?

Around $200 Million

Over $2 Billion

Over $2.6 Billion

Over $1.6 Billion

Q3. Ashton, on his 25th birthday started a 401K account earning 4.5% per year compounded yearly. He deposited $1,500 to begin the account, and put in $1,000 on his 26th birthday. From the 27th to his 35th birthday, he put in $100 more than the previous year, but could not put in anything for five years after that when he was under-employed. He would now like to start depositing money in the account again, starting with $500 and increasing it by $50 each year till he retires on his 65th birthday. How much money can he expect to have in the account on his 65th birthday?

$135,090

$165,430

$120,500

$117,800