g Twins Jane and Hal each inherited $150,000 exactly ten years ago. Jane invested the entire amount in a brokerage account to fund her retirement. Her account has been earning 8% per year since she invested it, and she expects it to earn 5% per year for the next 20 years. Hal spent all of his inheritance and has not saved anything for retirement. Assume there are no taxes. a. How much is Jane expected to have in her account at retirement (20 years from now)? b. Due to sibling rivalry, Hal wants to have at least $100,000 more saved at retirement (20 years from now) than Jane is expected to have at that time. He plans to make an equal deposit each year in an account earning the same annual interest rate as Jane’s, i.e., 5%, with the first deposit occurring one year from today and the last occurring 20 years from today. How much must Hal deposit each year in order to achieve his goal?
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Answer:
a) Jane currently has $150,000 x (1 + 8%)¹⁰ = $323,838.75 in her account
in 20 years, she will have $323,838.75 x (1 + 5%)²⁰ = $859,240.61
b) we can use the future value of an annuity formula to calculate Hal's annual contribution.
future value = annual contribution x annuity factor
annual contribution = future value / annuity factor
- future value = $959,240.61
- FV annuity factor, 5%, 20 periods = 33.066
annual contribution = $959,240.61 / 33.066 = $29,009.88
Related Questions
Assume that Hotel Excellent uses activity-based costing to allocate hotel overhead to guests. In Hotel Excellent, if the budgeted costs for the housekeeping department are $900,000, and total estimated activity-base usage is 27,000 hours, calculate the housekeeping department's activity rate. (Round answer to two decimal places.)a. $30.00 per housekeeping hourb. $45.00 per housekeeping hourc. $33.33 per housekeeping hourd. $35.88 per housekeeping hour
An income statement for Sam's Bookstore for the first quarter of the year is presented below:Sam's BookstoreIncome StatementFor Quarter Ended March 31Sales $ 910,000Cost of goods sold 560,000Gross margin 350,000Selling and administrative expensesSelling $ 119,000Administration 142,000 261,000Net operating income $ 89,000On average, a book sells for $65. Variable selling expenses are $4 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed.The contribution margin for Sam's Bookstore for the first quarter is:____________
A company purchased inventory as follows: 150 units at $10 350 units at $12 The average unit cost for inventory is
Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: Units Per unit price Total Balance, 1/1/18 200 $5.00 $1,000 Purchase, 1/15/18 100 5.30 530 Purchase, 1/28/18 100 5.50 550 An end of the month (1/31/18) inventory showed that 160 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month
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By using the FIFO Method the Closing inventory is $3,519. The cost of goods sold is $18,786. The sales revenue is $27,279, and the gross profit is $8,493.
Closing Inventory:
Ending inventory = 69 units * $51 (unit cost from the last purchase) = $3,519
Cost of Goods Sold:
The cost of goods sold will be the cost of the inventory that was sold during the year. Since the inventory is allocated based on the FIFO method, we start by using the units from the beginning inventory, then from the April 7 purchase, and finally from the July 16 purchase.
a. From the beginning inventory (53 units):
Cost of goods sold = 53 units * $45 (unit cost from the beginning inventory) = $2,385
b. From the April 7 purchase (133 units):
Cost of goods sold = 133 units * $47 (unit cost from the April 7 purchase) = $6,251
c. From the July 16 purchase (247 units):
Since the total number of units from the July 16 purchase (203 units) is greater than the remaining units needed (433 - 53 - 133 = 247 units), we will use all the units from this purchase.
Cost of goods sold = 203 units * $50 (unit cost from the July 16 purchase) = $10,150
Total cost of goods sold = $2,385 + $6,251 + $10,150 = $18,786
Sales Revenue:
Sales revenue = 433 units * $63 (selling price) = $27,279
Gross Profit:
Gross profit = Sales revenue - Cost of goods sold
Gross profit = $27,279 - $18,786 = $8,493
Therefore, using the FIFO method, the ending inventory is $3,519, the cost of goods sold is $18,786, the sales revenue is $27,279, and the gross profit is $8,493.
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Answer:
If opportunity cost is 5%, PV=10,366.05
If opportunity cost is 6.5%, PV=9,934.19
If opportunity cost is 11.5%, PV=8,656.79
Explanation:
PV=Σ
If opportunity cost is 5%: PV = =10,366.05
If opportunity cost is 6.5%: PV = =9,934.19
If opportunity cost is 11.5%: PV = =8,656.79
(B) Answer questions about the project after contract award
(C) Debrief the bidder on their performance after completion of the contract
(D) Solicit pricing information from the bidders on proposed scope changes
Answers
Answer:
A. Answer questions about the project prior to submittal of proposals
Explanation:
A bidder conference is a meeting held by a buyer to discuss a possible purchase with multiple potential suppliers.
Final answer:
Bidder conferences are used to answer questions about the project prior to the submittal of proposals, ensuring a clear understanding of project requirements for all potential bidders.
Explanation:
Bidder conferences are a tool used in the procurement process of projects. The correct answer to what bidder conferences are used for is (A) Answer questions about the project prior to submittal of proposals. These conferences provide a forum for potential bidders to clarify any uncertainties regarding the project scope, specifications, and procurement process. The primary purpose of a bidder conference is to ensure that all potential bidders have a clear and common understanding of the project requirements, which helps them to prepare accurate and competitive proposals.
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Answer:
a. 2,800,000 shares
b. $49.50
Explanation:
a. Poison is a tactic used by a company threatened with an unwelcome takeover bid to make itself unattractive to the bidder
Shares that the unfriendly outside group must acquire for the poison pill to go into effect is
= 20% of 14,000,000 shares.
= 14,000,000 × 20%
= 2,800,000 shares
b. The new purchase price for the existing stockholders will be
=$66 × (1 - 0.25)
= $49.50
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If consumer satisfaction is to be assumed as the objective of macro marketing system , in such a case each consumer should decide how to best satisfy his or her own wants.
Consumer wants are ever-upgrading and unlimited
Customer satisfaction is a niche concept of deriving satisfaction from consumption of certain goods and services .
Such goods and services can be subjective and may change due to external factors acting upon the situation.
Satisfaction is directly related to utility a person derives from its consumption .
To explain this with an example we may say that, a drunkard derives utmost satisfaction by consuming alcohol even after knowing the ill effects of the same and wont get much satisfaction in consuming orange juice.
Summing up above points we can say that if consumer satisfaction is to be taken as the objective for marketing purposes the correct option is C Each consumer should get to decide how best to satisfy his or her wants .
To know more about customer satisfaction , please refer to the link below
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Answer:
B. Expected Return and Beta
Explanation:
The security market line displays the expected return of an individual asset as a function of it systematic risk (the diversifiable risk) as identified by beta if an asset is correctly priced it lies on the SML and if it lies above the SML it is undervalued because they yield a higher return for a given amount of risk and if it lies below the SML it is overvalued because for a given amount of risk it yield a lower return.