1)TVM/ Retirement An investor is 25 years old and has $10,000 in a brokerage account

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1)TVM/ Retirement

An investor is 25 years old and has $10,000 in a brokerage account. He invests $5,000/ year while working until age 65. From age 65 to 85 he is retired and wishes to withdraw $50,000/ year. While in retirement the expected ROI is 8%. How much ROI (yield) must he earn annually from age 25 to 65?

 

 

 

2.     NPV/ IRR/ MIRR

An investor invests $250,000 into a small business. The cash flows are 3 years @ $50,000, 4 years @ $60,000, 5 years @ $70,000 and 6 years @ $80,000. The required rate of return is 20%. The reinvestment rate is 5%. Provide the NPV, IRR and MIIRR.

 

 

 

3.     Debt Amortization, House, 5- year Pay Off and house equity.

An investor buys a $350,000 house and puts 20% down in cash and finances 80% with a 3.5% fixed rate monthly mortgage. The house is expected to appreciate by 5% annually. Provide the:

a.     Monthly mortgage payment

b.     5-Year Principal Payoff

c.     Value of the house in 5 years

d.     Equity in the house after 5 years.

e.     CAGR (compound annual growth rate) of 5 years.