Explore BrainMass

Explore BrainMass

    Retirement-Planning Investments

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    P3-4. Dixon Shuttleworth has been offered the choice of three retirement-planning investments. The first investment offers a 5 percent return for the first 5 years, a 10 percent return for the next 5 years, and a 20 percent return thereafter. The second investment offers 10 percent for the first 10 years and 15 percent thereafter. The third investment offers a constant 12 percent rate of return. Determine, for each of the given number of years, which of these investments is the best for Dixon if he plans to make one payment today into one of these funds and plans to retire in the following number of years.

    a. 15 years
    b. 20 years
    c. 30 years

    © BrainMass Inc. brainmass.com June 3, 2020, 9:09 pm ad1c9bdddf
    https://brainmass.com/business/futures/retirement-planning-investments-168690

    Solution Preview

    . Investment # 1: Future Value Factor = (1.05)5 × (1.10)5 x (1.20)5 = 5.115
    Investment # 2: Future Value Factor = (1.10)10 × (1.15)5 = 5.217
    Investment # 3: Future Value Factor = ...

    Solution Summary

    This posting provides a detailed solution to the student's question.

    $2.19

    ADVERTISEMENT