wk3 https://courseworkhero.co.uk

 

By the due date assigned submit a 4-5 page report based on the following problem:
 

 Mary has been working for a university for almost 25 years and is now  approaching retirement. She wants to address several financial issues  before her retirement and has asked you to help her resolve the  situations below. Her assignment to you is to provide a 4-5 page report,  addressing each of the following issues separately. You are to show all  your calculations and provide a detailed explanation for each issue.

Issue A:
For the last 19 years, Mary has been  depositing $500 in her savings account , which has earned 5% per year,  compounded annually and is expected to continue paying that amount. Mary  will make one more $500 deposit one year from today. If Mary closes the  account right after she makes the last deposit, how much will this  account be worth at that time?

Issue B:
Mary has been working at the university  for 25 years, with an excellent record of service. As a result, the  board wants to reward her with a bonus to her retirement package. They  are offering her $75,000 a year for 20 years, starting one year from her  retirement date and each year for 19 years after that date. Mary would  prefer a one-time payment the day after she retires. What would this  amount be if the appropriate interest rate is 7%?
 

Issue C:
Mary’s replacement  is unexpectedly hired away by another school, and Mary is asked to stay  in her position for another three years. The board assumes the bonus  should stay the same, but Mary knows the present value of her bonus will  change. What would be the present value of her deferred annuity?

Issue D:
Mary wants to help pay for her  granddaughter Beth’s education. She has decided to pay for half of the  tuition costs at State University, which are now $11,000 per year.  Tuition is expected to increase at a rate of 7% per year into the  foreseeable future. Beth just had her 12th birthday. Beth plans to start  college on her 18th birthday and finish in four years. Mary will make a  deposit today and continue making deposits each year until Beth starts  college. The account will earn 4% interest, compounded annually. How  much must Mary’s deposits be each year in order to pay half of Beth’s  tuition at the beginning of each school each year?