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Please answer the three questions below.
A. Harriet just inherited $50,000,000. She knows nothing about money management and has
decided to educate herself in that area before making any major decisions. She has a
short-term investment for that period. She has the choice between two investments:
Investment A: at 6.5% compounded daily
Investment B: at 7% compounded semi-annually
i. Which option should she choose and why?
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Solved in 4 steps
- Harriet just inherited $50,000,000. She knows nothing about money management and hasdecided to educate herself in that area before making any major decisions. She has ashort-term investment for that period. She has the choice between two investments: Investment A: at 6.5% compounded dailyInvestment B: at 7% compounded semi-annually i. Which option should she choose and why? B. Harry is saving towards the down payment on a house. If he accumulates $5,000,000, hisparents have offered to match his savings. He invests $2,000,000 at 9%. i. How long will it be before he can approach his parents for their contribution? C. Jabari is planning for his retirement in 5 years’ time. He plans to deposit $200,000immediately into an investment plan that promises 11% annually. He will deposit$30,000 and the end of each of the next five years. i. What will be the value of the investment when Jabari retires in 5 years?Answer the following question, show all working. Use a financial calculator if needed. DO NOT use excel: Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows:Years 1 – 3 $15,000 each yearYear 4 to 6 $10,000 each yearYear 7 $25,000Interest on the fund is 5%.a) What is the present worth of this inheritance?b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?DETERMINING THE RIGHT AM OUNT OF SHORT-TERM, LIQUID INVESTM ENTS. Leo and Ava Bryant together earn approximately 92,000 a year after taxes. Through an inheritance and some wise investing, they also have an investment portfolio with a value of almost 200,000. a. How much of their annual income do you recommend the Bryants hold in some form of liquid savings as reserves? Explain. b. How much of their investment portfolio do you recommend they hold in savings and other short-term investment vehicles? Explain. c. How much, in total, should they hold in short-term liquid assets?
- Determining the right amount of short-term, liquid investments. Ella and Aaron Martin together earn approximately 92,000 a year after taxes. Through an inheritance and some wise investing, they also have an investment portfolio with a value of almost 200,000. a. How much of their annual income do you recommend the Martins hold in some form of liquid savings as reserves? Explain. b. How much of their investment portfolio do you recommend they hold in savings and other short-term investment vehicles? Explain. c. How much, in total, should they hold in short-term liquid assets?Ella and Aaron Martin together earn approximately $92,000 a year after taxes. Through an inheritance and some wise investing, they also have an investment portfolio with a value of almost $200,000. a. How much of their annual income do you recommend the Martins hold in some form of liquid savings as reserves? Explain. b. How much of their investment portfolio do you recommend they hold in savins and other short-term investment vehicles? Explain. c. How much, in total, should they hold in short-term liquid assets?On the basis of how long she has until retirement and her comfort with investment risk, Chelsea has decided that she wants to allocate the money in her retirement account as follows: 75% to equities, 20% to fixed income, and 5% to cash. If Chelsea assumes that each asset class earns the low end of the historical average rates of return provided below, what overall rate of return would she expect to earn over the long term? Equities: 8%-12% Fixed Income: 4% - 7% . Cash: 2% - 5% . O 6.90% O 5.60% O 10.65% O 7.75% 4.67%
- Your grandfather left an inheritance for you of $100,00. However you can only drawdown on the investment as follows: years 1 - 3 $15,000 each year Years 4 - 6 $10,000 each year year 7 $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?I need help working this problem out. Figuring out what table to use, whether to use: compound value, present value, amount of annuity, present value of annuity, sinking fund value? Please explain in detail each step. Nina deposits $3400 into a savings account earning simple interest at 6.3% annually. She intends to leave the money in the bank for three years. How much money, including both principal and interest, can she withdraw at the end of this time?5. A. compounded continuously. She ultimately would like to purchase a $15000 car. How much would she Miss Kito decides to invest some of her money in an account gaining 7% interest have to invest initially to have the necessary money in 5 years? Round your answer to the nearest whole dollar. Note: For continuous compounding you can use the formula: A = Pert
- Assume Sheryl Jenkins wants to accumulate $ 12,485.35 in two years. She currently has $ 10,809.59 to invest. What interest rate must she earn on her investment (that is, if she deposits $ 10,809.59 today) to have $ 12,485.35 exactly two years from today?Consider the following independent situations. a. Mike Finley wishes to become a millionaire. His money market fund has a balance of $92,296 and has a guaranteed interest rate of 10%. How many years must Mike leave that balance in the fund in order to get his desired $1,000,000? b. Assume that Sally Williams desires to accumulate $1 million in 15 years using her money market fund balance of $182,696. At what interest rate must Sally’s investment compound annually?Martha wishes to invest the sum of R30000. The bank she approached with her business idea gave her 3 investment options to choose from. Option A: To invest the money in a business that pays an interest of 5% compounded quarterly. Option B: To invest in a business that pays an interest of 4% compounded monthly Option C: To invest in a business that pays an interest of 4.5% compounded continuously. Which option should Martha choose?
