3 of302 complete) HW Score: 66.67%, 10 of 15 p Problem 4-38 (algorithmic) Questi
ID: 1714272 • Letter: 3
Question
3 of302 complete) HW Score: 66.67%, 10 of 15 p Problem 4-38 (algorithmic) Question Help The U S stock market has returned an average of about 8% per year since 1900 This reun works out to a real return (i e, adjusted for mat on) of ap romately 5% per year a. If you invest S 108,000 and you earn 5% a year on t how much real purchasing power wil you have in 30 years? b. If you invest $6,000 per year for 18 years, how much real purchasing power will you have at the end of 30 years? The interest rate is 59% per year click the "con to view the merest and annuity table for discrete compounding when p5% per year a. The real purchasing power amount in 30 years is (Round to the nearest dollar)Explanation / Answer
a.) P = 108000 i = 5 % n = 30 Total = P x (1 + 0.01i)n = 466769.8 Real purchasing power is $466769.8 b.) i is 5% n P Net amount at end of 30 years 1 6000 24696.81 2 6000 23520.77 3 6000 22400.74 4 6000 21334.04 5 6000 20318.13 6 6000 19350.6 7 6000 18429.14 8 6000 17551.56 9 6000 16715.78 10 6000 15919.79 11 6000 15161.7 12 6000 14439.72 13 6000 13752.11 14 6000 13097.25 15 6000 12473.57 16 6000 11879.59 17 6000 11313.89 18 6000 10775.14 Sum 303130.3 The real purchasing power at the end of 30 years is $303130.3
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.