gruptH Which the NPV is the dependent variable of the annual production. In othe
ID: 2808575 • Letter: G
Question
gruptH Which the NPV is the dependent variable of the annual production. In other words, use a one-dimensional data table to determine the sensitivity of the profitability to the quantity sold. c) Calculate the NPV, IRR, PB and DPB when sales start at 10.000 units se a two-dimensional data table to determine the sensitivity of the profitability to the price and quantity sold. Graph d) U 20) Today is your 30th birthday. You expect to retire at age 65, and actuarial tables suggest that you will live to be 95. You want to move to Ashville, NC when you retire. You estimate that it will cost you $300,000 to make the move (on your 65th birthday), and that your annual living expenses will be $25,000 a year after that. You expect to earn an annual return of 7% on your savings. TVM a. How much will you need to have saved by your retirement date? b. You already have $30,000 in savings. How much would you need to save at the end of each of the next thirty-five years to be able to afford this retirement plan? c. If you did not have any current savings and did not expect to be able to start saving money for the next five years (that is, your first savings payment will be made on your 35th birthday), how much would you have to set aside each year after that to be able to afford this retirement plan?Explanation / Answer
*Current age is 30 and expect to retire at 65. According to actuarial tables you will to be 95 so 30 years after retirement.
* Want to move Ashville, NC at age 65 which will cost you $ 300,000 and after a year annual expenses will be $ 25,000.
* Rate equal to 7%
(a) at age of 65 You have to save:
Rate = 7%, NPER = 30, PMT = $ 25,000, FV = 0, type = 0
Put formula in excel
=PV(7%,30,25000,0,0)
So you will get PV = $ 310,226.03, but you have to pay $ 300,000 for Ashville, NC as well so your total saving should be
=310,226.03+300,000
=$ 610,226.03
(b) you have saving of $ 30,000 so you have to save every year for next 35 years:
Rate = 7%, NPER = 35, PV = $ 30,000, FV = $ 610,226.03, type = 0
Put formula in excel
=PMT(7%,35,-30000,610226.03,0)
So you will get PMT =$ 2,097.33 which you have to save every year to fulfill your retirement plans.
(c) if you don't have savings and want to start saving from age of 35 then you have to save:
Rate = 7%, NPER = 30, PV = 0, FV = 610,226.03, type = 1
Put a formula in excel
=PMT(7%,30,0,610226.03,1)
So you will get PMT = 6037.48 which you have to save every year to complete your retirement plans.
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