ACC/421 Assignment 5

Question 1

Lyle O’Keefe invests $47,600 at 10% annual interest, leaving the money invested without withdrawing any of the interest for 10 years. At the end of the 10 years, Lyle withdrew the accumulated amount of money.

(a) Compute the amount Lyle would withdraw assuming the investment earns simple interest. (Round answers to 0 decimal places, e.g. $458,581.)

Total withdrawn

If not, what will the deficiency be? (Round answers to 0 decimal places, e.g. $458,581.)

Question 4

Stephen Bosworth, a super salesman contemplating retirement on his fifty-fifth birthday, decides to create a fund on an 8% basis that will enable him to withdraw $31,000 per year on June 30, beginning in 2016 and continuing through 2019. To develop this fund, Stephen intends to make equal contributions on June 30 of each of the years 2012–2015.

(a)

How much must the balance of the fund equal on June 30, 2015, in order for Stephen Bosworth to satisfy his objective? (Round answers to 0 decimal places, e.g. $458,581.)

Balance of the fund equal on June 30, 2015		$[removed]

Question 5

Consider the following independent situations.

(a) Mark Yoders wishes to become a millionaire. His money market fund has a balance of $403,884 and has a guaranteed interest rate of 12%. How many years must Mark leave that balance in the fund in order to get his desired $1,000,000?

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years

(b) Assume that Elvira Lehman desires to accumulate $1 million in 15 years using her money market fund balance of $209,004. At what interest rate must Elvira’s investment compound annually? (Round answer to 0 decimal places, e.g. 5%.)

Interest rate

[removed]

11 years ago

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ACC/421 Assignment 5

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