Question

1. You invest $25,000 today and $4000 per year for 32 years. Assuming you earn an 8.5% rate of return, how much will you have at the end of the 32^nd year?
2. You want to borrow $25,000. For the loan to you must repay $1100 every quarter (4 times per year) for the next 5 years plus $8700 at the end of the 5 years. Based on this, what rate of interest are you paying?
3. Finally, assume you currently have $215,000 that you are ready to invest for retirement. In addition, you plan to save
   • $8,500 per year at the end of each year for years 1-9
   • $13,000 at the end of year 10
   • $18,500 per year at the end of each year for years 11-18

Assuming you earn 8.7% as an annual rate of return, how much will you have 18 years from today when you retire?

Answer 1

1)

At the end of the 32^nd year the balance will be $933,421.29