Fi 360 Week 2

3-2. Dixon Shuttleworth has a large sum of money that he wants to invest to finance his retirement. He has been presented with three options. The first base investment offers a 5% return for the first five geezerhood, a 10% return for the next five years, and a 20% return thereafter. The second investment offers 10% for the first ten-spot years and 15% thereafter. The third investment offers a constant 12% range of return. Determine which of these investments the best for Dixon is if he plans to retire in the spargon-time activity number of years. a. ifteen years b. twenty years c. thirty years 3-4. You collect a trust fund that forget pay $1 zillion exactly ten years from today. You want cash now, so you are considering an opportunity to sell the right to the trust fund to an investor. a. What is the least you provide sell your claim for if you could earn the following rates of return on similar risk investments during the ten-year period? a. 6% b. 9% c. 12% b. redo part ( A) under the assumption that the $1 million payment depart be received in fifteen rather than ten years. c.Based on your findings in parts (a) and (b), discuss the effect of both the size of the rate of return and the time until receipt of payment on the present honour of future sum. 3-5. You have saved $10,000 toward a down payment on a home. The money is invested in an sum up earning 7% interest. You forget be ready to purchase the new home once your savings broadside grows to $25,000. d. Approximately how many years will it take for the account to benefit $25,000? e. If the interest rate doubles to 14%, how many years will pass before you reach your $25,000 target? 3-10.Liliana Alvarezs employer offers its workers a two-month paying(a) sabbatic every seven years. Liliana, who just started working for the firm, plans to spend her sabbatical touring Europe at an estimated cost of $25,000. To finance her trip, Liliana plans to make six annual end-of-year deposits of $2,500 each, starting this year, into an investment account earning 8% interest. d. Will Lilianas account balance at the end of seven years be plentiful to pay for her trip? e. Suppose Liliana increases her annual contribution to $3,150. How large will her account balance be at the end of seven years?