Questions:- John wishes to create his own life annuity plan. He expects to retire at age 60. He plans to deposit a fixed amount of money in a retirement account each year starting from age 30. Assume all amounts are deposited or withdrawn at the end of the year. Suppose the account can earn an annual rate of 5%. 1. (a) If John wants to withdraw $120,000 each year starting from age 60 for the next 20 years, calculate the amount that should be accumulated in the retirement account at age 60. (7%) (b) Calculate the fixed amount of money that John requires to deposit per year for 30 years, starting from age 30 to accumulate the amount (8%) calculated in part (a). (c) In the past 5 years, Industrial and Commercial Bank of China (ICBC) has offered a stable dividend distribution of HK$0.26 per share each year. What is the annual rate of return of this investment if you can (5%) buy ICBC share at $5.2 in the market?

Questions:- John wishes to create his own life annuity plan. He expects to retire at age 60. He plans to deposit a fixed amount of money in a retirement account each year starting from age 30. Assume all amounts are deposited or withdrawn at the end of the year. Suppose the account can earn an annual rate of 5%. 1. (a) If John wants to withdraw $120,000 each year starting from age 60 for the next 20 years, calculate the amount that should be accumulated in the retirement account at age 60. (7%) (b) Calculate the fixed amount of money that John requires to deposit per year for 30 years, starting from age 30 to accumulate the amount (8%) calculated in part (a). (c) In the past 5 years, Industrial and Commercial Bank of China (ICBC) has offered a stable dividend distribution of HK$0.26 per share each year. What is the annual rate of return of this investment if you can (5%) buy ICBC share at $5.2 in the market?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 32P

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