We're Open
+44 7340 9595 39
+44 20 3239 6980

1. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you will need to withdraw $5,000 per yea

  100% Pass and No Plagiarism Guaranteed

1. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money sho

FINC 610

Homework Assignment 2 (8 marks) (individual Work)

1. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money should you place in the retirement fund each year for the next 20 years to reach your retirement goal if you can earn 12% interest per year from the fund?       (3 Marks)                                                                                                                                                                                                                                                                                                                

2. Assume that a particular firm has a total asset of $200 million and it has to choose a financing scheme among three ones. The description of these schemes is given below.

  1. Scheme 1: Borrowing today a unique amount equal to 25% of the total assets value. This borrowed amount will be paid off at the end of year 5 and the interests charges will be based on a 5.25% yearly fixed interest rate.
  2. Scheme 2: Borrowing today a unique amount equal to 25% of the total assets value. The banker offered the firm a fully amortizing for 5 years at a 5.25% annual rate. The payment should be paid at the end of each year.
  3. Scheme 3: Borrowing at the end of each year 5% of the of the total assets value (i.e., borrow $10 million at the end of each year for 5 years). The total borrowed amount will be paid off at the end of year 5 and the interests charges will be based on an annual 4.25% fixed interest rate.

What would you recommend to the CFO (Chief Financial Officer) if we suppose that he has concern about the cost of borrowing and that he would choose the financing scheme that minimizes the amount of interest paid on the financing period? Document your computations and findings. (5 Marks)


100% Plagiarism Free & Custom Written,
Tailored to your instructions


International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

UK Registered Company # 11483120


100% Pass Guarantee

STILL NOT CONVINCED?

View our samples written by our professional writers to let you comprehend how your work is going to look like. We have categorised this into 3 categories with a few different subject domains

View Our Samples

We offer a £ 2999

If your assignment is plagiarised, we will give you £ 2999 in compensation

Recent Updates

Details

  • Title: 1. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money sho
  • Price: £ 55
  • Post Date: 2018-11-09T11:34:57+00:00
  • Category: Research Paper Queries
  • No Plagiarism Guarantee
  • 100% Custom Written

Customer Reviews

1. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money sho 1. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money sho
Reviews: 5

A masterpiece of assignment by , written on 2020-03-12

The writer 0223 is really helpful. He gave me the best essay ever. Love you loads for such a great job and thanks again.
Reviews: 5

A masterpiece of assignment by , written on 2020-03-12

I ordered the literature review for my research project in rush delivery. I was not expecting that they would complete my order 2 hours before my chosen time. The quality is also nice. Thank you for help.