1) You plan to retire when you have $1,000,000 in savings. You can make a deposit of $350 per quarter into a retirement

Question

1) You plan to retire when you have $1,000,000 in savings. You can make a deposit of $350 per quarter into a retirement saving account that pays 12 percent annual interest rate compounded quarterly. How many years will you have to wait to retire? 2) You invest $10,000 into a savings account that pays an annual interest rate of 11.25%, compounded monthly. How much would you have in your account after 15 years? 3) You purchased a rare baseball card for $10,000 as an investment. Five years later you accidentally spilled coffee on it while working on your finance exam and were forced to sell it for $6,000. What rate of return did you earn?

Help In Homework · Accepted Answer

1) We can calculate the number of payments period by using the following formula in excel:- =nper(rate,pmt,pv,-fv) Here, Nper = Number of payments period (Quarterly) Rate = 12%/4 = 3% (quarterly) Pmt = $350 PV = $0 FV = $1,000,000 Substituting the values in formula: = nper(3%,350,0,-1000000) = 150.97 periods Number of years = Nper / 4 = 150.97 / 4 = 37.74 years 2) We can calculate the future value by using the following formula in excel:- =fv(rate,nper,pmt,-pv) Here, FV = Future value Rate = 11.25%/12 = 0.9375% (monthly) Nper = 15*12 = 180 periods (monthly) Pmt = $0 PV = $10,000 Substituting the values in formula: = fv(0.9375%,180,0,-10000) = 53,636.19 3) We can calculate the rate of return by using the following formula in excel:- =rate(nper,pmt,-pv,fv) Here, Rate = Rate of return Nper = 5 periods Pmt = $0 PV = $10,000 FV = $6,000 Substituting the values in formula: = rate(5,0,-10000,6000) = -9.71%

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1) You plan to retire when you have $1,000,000 in savings

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