Question from the file

Question

A businessman is planning to get an insurance and investment program for his retirement funds. A friend of him recommended 3 insurance companies with good investment performance for the past years. He has an income of $30,000 a month and is planning to allocate the $1500 for the investment program and wanted a retirement fund of $500,000. Table 1: shows the name of the insurance company, name of program and the annual investment performance percentage of each companies. The years expected by the businessman to get the desired amount of fund value is shown in Table 2. How much is the total deposits through the years for every program to have a fund value of $500,000?

Table 1

Company Program Percentage

ABC InsuraBest 8.50%

NOW BrighterLife 8.12%

JEC LifeCare 5.50%

Table 2

Company Years expected to reach fund value

ABC 15

NOW 15

JEC 15

Formula

A = Final Amount

P = Payment in Monthly Basis

r = Investment Performance Percentage

n = number of times the investment performance percentage is applied per time period

t = Years expected to reach fund value

A = P(1+r/n) ^(nt)

A = 1500 (1+ 8.5/1) ^(1*15)

Results

Note: just change the IPP in the formula to get the final amount of the other programs

The fund value of the program for ABC company after 15 years will be $ 531,578.34

The fund value of the program for NOW company after 15 years will be $ 515,024.91

The fund value of the program for JEC company after 15 years will be $ 415,372.59

To get the Value of Total Deposits:

TD = Total Deposits

P = Payment in Monthly Basis

t = Years expected to reach fund value

TD = (P*12*t)

TD= (1500*12*15)

Total Deposits = $ 270,000.00

Answer

Total Deposits = $ 270,000.00

Question from the file 2

Question

A young investor decided to purchase 35 shares of ABC company at $50 per-unit price. Hoping that the shares will grow value, he decided to hold his shares in ABC company for 5 years. During that time frame, the company has a dividend declaration and paid yearly $2 dollar per share. After holding the share for 5 years, the young investor decided to sell all of her shares to ABC company at an ex-dividend price of $60 dollars. He would like to determine the rate of return during the 5 years he owned the shares.

Formula

Annualized Rate of Return = (Ending Value of Investment + yearly dividend per share – Beginning Value of Investment/ Beginning value of Investment) x 100

A = Rate of Return

E = Ending Value of Investment

d = yearly dividend per share

B = Beginning value of Investment

A = ((E+ d – B/B) x 100

A = (($60 + $2 – 50) / 50)x 100

A = 25%

Result

The young Investor realized a 25% return on his shares over the two-year period

Answer

= 25%