Wants to be able to withdraw $80,000 per year at the end of each year from his retirement account for 30 years after he retires. Assuming a 7% annual compound interest rate, what is the minimum amount Mr. Smith must-have in this account when he retires?

Please indicate what you entered into your calculator to solve these problems.

An investor in Treasury securities expects inflation to be 2.2% in Year 1, 2.7% in Year 2, and 3.65% each year thereafter. Assume that the real risk-free rate is 2.25% and that this rate will remain constant. Three-year Treasury securities yield 5.20%, while 5-year Treasury securities yield 6.00%. What is the difference in the maturity risk premiums (MRPs) on the two securities; that is, what is MRP5 - MRP3? Do not round intermediate calculations. Round your answer to two decimal places.

There is a 5-year, $80,000 loan is secured at a nominal rate of 4% per year, compounded quarterly. If immediately after making your second quarterly payment you decide to pay off the loan, what would be the balance amount? Draw a cash flow diagram for the answer and list all of calculation steps with an explanation sentence.

1.there is an example of a three-year annuity, which the first payment is in year 1, the second payment in year 2, and the third payment is in year 3. However, if the first payment will be paid in the second year, how can I calculate the present value of such annuity.

2.Why the annuity due's result in a higher present value? If you have cash outflow, wouldn't your money be less and the present value shouldn't be decreased?

3.It is said that continuous compounding is the mathematical limit compounding interest can reach. And at that time n reaches infinity, so the formula changed from FV = P*(1+r/n)^(nt) to FV = P*e^(rt). I have no idea how these changes happened and I want to know when and how to use this formula.

4.I don't really understand that when I compound interest if I'm dealing with months or quarters, I have to divide 4 or 12.
Quarterly compounding: FV = 1000(1+(0.05/4))^(4*3)
Monthly compounding: FV = 200(1+(0.05/12))^(12*3)

could you please explain the meaning on why to divide 4 or 12?

1. The following are the sales forecast of Avril Furniture Company for the upcoming fiscal year:

Past experience has shown that the ending inventory for each quarter should be equal to 10% of the next quarter’s sales in units. The company expect to start the first quarter with 4,000 units.

Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. Fourth quarter ending of materials is estimated as 8,000 pounds and a total of 12,000 pounds of material A are on hand to start the year. The cost of material A is $3 per pound.

Required:

1. Prepare a production budget showing the number of units to be produced each quarter and for the year in total
2. Prepare Avril’s Direct Material Budget and calculate direct materials dollar amount of purchases by quarter and for the year in total

Prepare journal entries for these transactions for Year 1 and Year 2 and post them to T-accounts. lines 1 through 19

[The following information applies to the questions displayed below.]

Sun Corporation received a charter that authorized the issuance of 119,000 shares of $6 par common stock and 18,000 shares of $75 par, 6 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation:

Year 1

1.Jan. 5 Sold 17,850 shares of the $6 par common stock for $8 per share.

2. Jan 12 Sold 1,800 shares of the 6 percent preferred stock for $85 per share.

3. Apr. 5 Sold 23,800 shares of the $6 par common stock for $10 per share.

4. & 5. (record cash revenue earned & record payment for operating expenses) Dec. 31 During the year, earned $301,400 in cash revenue and paid $241,600 for cash operating expenses.

6. Dec 31 Declared the cash dividend on the outstanding shares of preferred stock for Year 1. The dividend will be paid on February 15 to stockholders of record on January 10, Year 2.

7, 8 & 9. (Record closing entry for service revenue, operating expenses & dividends) Dec 31 Closed the revenue, expense, and dividend accounts to the retained earnings account.

Year 2

10. Feb. 15 Paid the cash dividend declared on December 31, Year 1.

11. Mar. 3 Sold 2,700 shares of the $75 par preferred stock for $95 per share.

12. May 5 Purchased 500 shares of the common stock as treasury stock at $12 per share.

13 & 14. (record cash revenue earned & record payment for operating expenses)Dec. 31 During the year, earned $254,900 in cash revenues and paid $179,600 for cash operating expenses.

15. Dec 31 Declared the annual dividend on the preferred stock and a $0.50 per share dividend on the common stock.

16, 17 & 18 (Record closing entry for revenue accounts, operating expenses & dividends) Dec 31 Closed revenue, expense, and dividend accounts to the retained earnings account.

19. Post all transactions to T-accounts

40. Assuming there is expected to be inflation over the coming year, will a 1-year TIPS (Treasury inflation protected security) offer a higher or lower interest rate than a comparable non-TIPS Treasury security?   
     
          Higher
          Lower
          Rates will be the same



41. What problems are caused by even a moderate level of inflation? (check all that apply)
     
          Unexpected redistribution of income, and the appearance of unfairness
          Errors in investment and savings decisions
          Expenditures of real resources to predict and adjust to inflation
          Money loses its value, and people turn to barter instead



42. How does the CPI compare to a true cost-of-living index?   
     
          The CPI has a downward bias
          The CPI has an upward bias
          The CPI is a true cost-of-living index
          The CPI varies from a true cost-of-living index in unpredictable ways



43. Which of the following statements about potential GDP are NOT true? (check all that apply)
     
          It is achieved only at the peak of the business cycle
          It is impossible to precisely measure
          It is somewhat inside the production possibilities curve
          It will increase when the prices of resources go down
          There is no cyclical unemployment
          Uemployment equals the natural rate



44. When aggregate demand and aggregate supply intersect to the left of potential GDP, we say that the economy is experiencing ____ .   
     
          A recessionary GDP gap
          An inflationary GDP gap
          A stable long-run equilibrium position
          Rapid inflation
          Falling potential GDP



45. If the economy is operating well below potential GDP, what will be the effect of an increase in aggregate demand?   
     
          Real GDP will fall, and the price level will fall
          Real GDP will rise, and the price level will change very little
          Real GDP will rise, and the price level will rise significantly
          It is impossible to predict what will happen to real GDP, but the price level will fall
          It is impossible to predict what will happen to the price level, but real GDP will fall

Suppose that an investor with a 5 year investment horizon is considering purchasing a 7 year, 9% coupon bond selling at par. The investor expects that he can reinvest the coupon at an annual interest rate of 9.4% and that at the end of the investment horizon 5 year bond will be selling to offer a yield to maturity of 11.2%. What is the total return for this bond?

32. Suppose the government was operating a balanced budget in the year 2025. The next year, in 2026, the government cut taxes by $20 billion.

Part 1: After the tax cut is implemented, what is the impact on public saving? Using an equation or model, explain your answer.

Part 2: Assume that all consumers believe the tax cut is going to be matched by a tax increase in the near future. As such, consumers save the full proceeds of the tax cut. What is the impact of the tax cut on private savings? Using an equation or model, explain your answer.

Part 3: Assume that all consumers believe the tax cut is permanent. As such, consumers spend the full proceeds of the tax cut. What is the impact of the tax cut on private savings? Using an equation or model, explain your answer.

Part 4: In both scenarios – (a) consumers save all of the tax cut and (b) consumers spend all of the tax cut – what is the impact on national saving? Using an equation or model, explain your answer both scenarios.

Determine the value of EUAW of $3,750 received in year 0 and a year after begins to yield $1,000 a year for 6 years at an interest of 10%