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docker41 [41]
3 years ago
10

You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, w

ith the first occurring today. The bank pays 7% interest, compounded annually. You expect to receive annual raise of 3%, which will offset inflation, and you will let the amount you deposit each year also grow by 3% (i.e., your second deposit will be 3% greater than your first, the third will be 3% greater than the second, etc.). How much must your first deposit be if you are to meet your goal
Business
1 answer:
Rom4ik [11]3 years ago
7 0

Answer:

First deposit will be $11,213.87

Explanation:

To derive how much the first deposit must be, the deposit can be derived by using payment formula for growing annuity

P = FV x (r - g) / [(1 + r)^n - (1 + g)^n]

When FV = $1,000,000

r = 7%

g = 3%

n = 25

Hence, First payment will be:

P = 1,000,000 * (7% - 3%) / (1.07^25 - 1.03^25)

P = 1,000,000 * 4% / 5.427433 - 2.093778

P = 40,000 / 3.333655

P = 11998.842

P = $11,998.84

However, this formula is applicable when the payments are made at the end of the year. In this case the payments are upfront, occurring today. We need to adjust this first payment to reflect the early payment.

Hence, first payment = $11,998.84  / (1 + 7%)

First payment =  $11,998.84  / (1 + 0.07)

First payment = $11,998.84  / 1.07

First payment = 11213.8691588785

First payment = $11,213.87

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Assume the auto market is initially in equilibrium with imports from Japan taking up a significant share of the market. Now assu
Zanzabum

Answer:

It depends

Explanation: If the quota is a lower value than the current level of japan sales, the equilibrium price will go up, because the supply will be lower than the demand pushing the price to rise and incentivizing other car suppliers to increase the offer. If the quota is higher than the current sales of Japanese cars, and if the demand keeps pushing the supply to go up, the market share of Japanese car will grow until meeting the quota. The price will go up until achieve equilibrium again. After that point, the market supply will be based on changes in the market no related to Japanese imports.

7 0
3 years ago
Camaro GTO Torino Cash $ 2,000 $ 110 $ 1,000 Short-term investments 50 0 580 Current receivables 350 470 700 Inventory 2,600 2,4
SSSSS [86.1K]

Answer:

<u>Current Ratio :</u>

Camaro = 2.6

GTO = 3.5

Torino = 1.95

<u>Acid Test Ratio :</u>

Camaro = 1.3

GTO = 1.08

Torino = 0.84

Explanation:

The current ratio and acid-test ratio for each of the following separate cases will be as follows

Current ratio = Current Assets ÷ Current Liabilities

Camaro = 2.6

GTO = 3.5

Torino = 1.95

Acid Test Ratio = (Current Assets - Inventory) ÷ Current Liabilities

Camaro = 1.3

GTO = 1.08

Torino = 0.84

8 0
2 years ago
How long will it take money to double if compounded continuously
allsm [11]

Answer:

The basic rule of 72 says the initial investment will double in 3.27 years.

7 0
2 years ago
When a project has a positive total slack, some activities can be ________ without jeopardizing completion of the project by its
Art [367]

Answer:

Delayed, accelerated

Explanation:

Total or aggregate slack, is the term which is defined for the activity, is the time that this activity could delayed without impacting on the final date of the project.

It can be computed as the:

Smaller value of Late finish - Early finish field

and

Late start - Early start field

So, when project has positive total slack, few activities delayed the completion of project and when the project has negative total slack, then few activities accelerated to finish the project.

4 0
3 years ago
The risk-free rate is 3%. MCD currently prices at $25. The Delta of a 1-year at-the-money European call on MCD is 0.5. John has
erica [24]

Answer:

Short 1.5 shares

Explanation:

Given data :

Risk free rate = 3%

current price ( market price ) = $25

Delta of  1-year at money European call on MCD = 0.5

<u>Determine how many shares of MCD John should either Long or short to achieve a delta-neutral </u>

use the relation below

4 * 0.5  + 1 ( 0.5 - 1 )  + x = 0

x ( number of shares ) =  - [ 4 * 0.5  + 1 ( 0.5 - 1 ) ]

                                     = - 1.5 shares

negative ( - ) means MCD should short 1.5 shares

5 0
2 years ago
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