Calculating present and future values. Use future or present value techniques to solve the following problems.
a. Starting with
15,000, how much will you have in 10 years if you can earn 6 percent on your money? If you can earn only 4 percent?
b. If you inherited
45,000 today and invested all of it in a security that paid a 7 percent rate of return, how much would you have in 25 years?
c. If the average new home costs
275,000 today, how much will it cost in 10 years if the price increases by 5 percent each year?
d. You think that in 15 years, it will cost
212,000 to provide your child with a 4-year college education. Will you have enough if you take
70,000 today and invest it for the next 15 years at 5 percent? If you start from scratch, how much will you have to save each year to have
212,000 in 15 years if you can earn a 4 percent rate of return on your investments?
e. If you can earn 4 percent, how much will you have to save each year if you want to retire in 35 years with1 million?
f. You plan to have
750,000 in savings and investments when you retire at age 60. Assuming that you earn an average of 8 percent on this portfolio, what is the maximum annual withdrawal you can make over a 25-year period of retirement?