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Vika [28.1K]
3 years ago
11

You are planning your retirement in 10 years. You currently have $162,000 in a bond account and $602,000 in a stock account. You

plan to add $7,800 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 11 percent and the bond account will earn a return of 7.5 percent. When you retire, you plan to withdraw an equal amount for each of the next 23 years at the end of each year and have nothing left. Additionally, when you retire you will transfer your money to an account that earns 6.75 percent. How much can you withdraw each year in your retirement?
Business
1 answer:
UNO [17]3 years ago
7 0

Answer:

Amount withdraw each year = $ 186,991.24

Explanation:

Amount accumulate at the time of retirement = FV of Current Investment in Bond + FV of Current Investment in Stock + FV of annuity deposited in bond

Amount accumulate at the time of retirement = 162000 x (1+7.5%)^10 + 602000 x (1+11%)^10 + 7800 x ((1+7.5%)^10 -1) / 7.5%

Amount accumulate at the time of retirement = $ 2,153,565.83

Amount withdraw each year = Amount accumulate at the time of retirement/Annuity factor

Amount withdraw each year = 2153565.83 / ((1-(1+6.75%)^-23) / 6.75%)

Amount withdraw each year = $ 186,991.24

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Answer:

The answer is: E) It would not necessarily be considered high elsewhere

Explanation:

Usually the inflation rate in the US and Europe is around 1-3%. In the early 1980's the US inflation rate was above 10% so it was considered huge. But if you consider it against inflation rates in other countries, like Argentina for example, which currently has an annual inflation rate of over 60% then it wasn't that big. During the 1980's many countries suffered from hyperinflation, with monthly inflation rates of over 50%.

So the high inflation rate in the US and Europe wasn't necessarily high for other countries.

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3 years ago
When the production manager finds the average life of her battery-lifetime data, this is an example of what phase of inferential
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Finding the average life of her battery lifetime data is an example of : D. Data analysis

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3 0
3 years ago
Read 2 more answers
Suppose on January 1 Aiden​'s Tavern prepaid rent of $ 13 comma 200 for the full year. At July 31​, how much rent expense should
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Explanation:

13,200 Rent prepaid on January 1 for 1 year

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$ 1,100 Rent expense per month

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8 0
3 years ago
Erie company has 500 units of capacity for their traditional product, Emu, and buys one point of automation. If Erie company’s c
11111nata11111 [884]

Answer: 2 years

Explanation:

The payback period is the amount of time that is needed for the required cash inflow of a project to offset the initial cash outflow that the business offsets. The payback period is when the initial outlay of an investment is recovered. There are two different methods used to calculate payback period. We have the average method and the subtraction method.

In the above question, the payback period is solved as follows:

Labour cost decreases by 10% for each unit.

Therefore,

= $10 × 10%

= $10 × 0.1

= $1 per unit.

In order to recover $2000, the business needs to sell the following;

= 2000/1

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If Eric sells 1000 units per year of Emu, it will take:

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3 years ago
Suppose Musashi and Rina are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix
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Answer:

a) Dominant strategy is for Rina to choose Right.

b) Musashi chooses left and Rina chooses right

Explanation:

As per the data given in the question,

a).

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When Rina selects left, Musashi selects right because  (7>4)

When Rina selects right, Musashi selects left because  (6>4)

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b)

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Hence, Musashi chooses left and Rina chooses right, (payoff: 6,1)

4 0
3 years ago
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