Let’s say I am 50 years old and I want to retire in 10 years (age 60) and I want to have
$1,000,000 in the bank. How much do I have to deposit today if I can earn 8% per year
on my savings?
2) Now assume I just turned 60 and have my $1,000,000 and I go to a Dr. Appt and they
tell me that I am sick and will die in 5 years – how much per year can I withdraw and
spend evenly every year so that when I die at 65 I will not have anything left if I can
earn 8% per year on my savings?
3) If my parents helped me by putting $20,000 in a savings account when I was 20 years
old and did not tell me about it and just gave me a wonderful birthday present (access
to the account) this year, how much money would I have if I was 50 years old?
Assume the average annual return is 8%.
4) How much would I have if I started saving $2,000 per year when I was 20 years old
and earned 8% average annual return if I am now 50 (30 years)?
5) What if I have a small business and I want to sell it. How much should I sell it for if
my expected net income for the next three years is $5,000, $7,500 and $10,000
assuming I can earn 6% on my money? Hint: What is the value of the business today?
6) If I put $10,000 in the bank today and I can earn 8% per year on my investment, how
long will it take for me to have $31,700?