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Return on investment and savings

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1) A building is purchased with a principal amount to pay down of $108000. The payments will be made in 20 EQUAL, end of year (not monthly!) installments. What are the equal installments if the annual interest rate is 10%?

2) Your job pays only once per year on December 31 - you just received your salary of $50,000 and will spend all of it. Next year you will start retirement saving. One year from today you will begin depositing 2% of your annual salary in an account that will earn 8% per year. Your salary will increase at 4% per year throughout your career. How much money will you have on the date of your retirement 40 years from today?

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Solution Summary

A calculation on the return on investment as well as the money left over for retirement based on an annual savings plan.

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1) A building is purchased with a principal amount to pay down of $108000. The payments will be made in 20 EQUAL, end of year (not monthly!) installments. What are the equal installments if the annual interest rate is 10%?

The annual payments would represent an annuity that has a present value of $108,000, ...

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