Question

5. Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 5 years. She will have enough to pay for the trip if she invests $5,000 per year until that anniversary and plans to make her first $5,000 investment on their first anniversary. Assume her investment earns a 4 percent interest rate, how much will she have saved for their trip if the interest is compounded in each of the following ways?

a. Annually b. Quarterly c. Monthly

6. Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the investment as follows:

Years 1 – 3 $15,000 each year

Year 4 to 6 $10,000 each year

Year 7 $25,000

Interest on the fund is 5%.

a) What is the present worth of this inheritance?

b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?

Answer 1

Question 5

Please note i have answered first question and it sub parts as per policy. Thanks,