Assignment 2: lasa 1—the time value of money

submit a 4-5 page report based on the following problem:

create a  report in Word format based on an information provided.  I am more  interested in seeing your calculations and how you arrived at the  answer.  So set this up as a report with an introduction and a  conclusion.  In the middle please just show me your calculation.   Highlight only the specific answer.  Example 20 + 20 = 40.  Identify  each as Issue A, Issue B, Issue C, and Issue D as a subheader. Please do  not attempt to write out what you are doing but SHOW me. This way I can  give you partial credit for incorrect answers.  You can develop a brief  narrative telling my why you did what you did for each of these issues.  

Format for Module 3 

Introduction

Issue A narrative 

Issue A calculation with answer highlighted

Issue B narrative

Issue B calculation with answer highlighted

Continue with each question narrative

Continue with each calculation with answer highlighted
 

            Mary has been working for a university for almost 25 years  and is now approaching retirement. She wants to address several  financial issues before her retirement and has asked you to help her  resolve the situations below. Her assignment to you is to provide a 4-5  page report, addressing each of the following issues separately. You are  to show all your calculations and provide a detailed explanation for  each issue.

Issue A:
            For the last 19 years, Mary has been depositing $500 in her  savings account , which has earned 5% per year, compounded annually and  is expected to continue paying that amount. Mary will make one more $500  deposit one year from today. If Mary closes the account right after she  makes the last deposit, how much will this account be worth at that  time? 

Issue B:
            Mary has been working at the university for 25 years, with  an excellent record of service. As a result, the board wants to reward  her with a bonus to her retirement package. They are offering her  $75,000 a year for 20 years, starting one year from her retirement date  and each year for 19 years after that date. Mary would prefer a one-time  payment the day after she retires. What would this amount be if the  appropriate interest rate is 7%?
 

Issue C:
Mary’s replacement  is unexpectedly hired away by another school, and Mary is asked to stay  in her position for another three years. The board assumes the bonus  should stay the same, but Mary knows the present value of her bonus will  change. What would be the present value of her deferred annuity?

Issue D:
            Mary wants to help pay for her granddaughter Beth’s  education. She has decided to pay for half of the tuition costs at State  University, which are now $11,000 per year. Tuition is expected to  increase at a rate of 7% per year into the foreseeable future. Beth just  had her 12th birthday. Beth plans to start college on her 18th birthday  and finish in four years. Mary will make a deposit today and continue  making deposits each year until Beth starts college. The account will  earn 4% interest, compounded annually. How much must Mary’s deposits be  each year in order to pay half of Beth’s tuition at the beginning of  each school each year?

Turn in your completed work to the M3: Assignment 2 Dropbox by Wednesday, September 20, 2017. 

  Assignment 2 Grading Criteria   Maximum Points    Calculated the compounded interest over 20 years and evaluated the value of the savings account upon closing. (CO 1)  32    Calculated the bonus  payout over 20 years vs. a one time payout with interest and  distinguished which bonus option would be better for the client. (CO 1)  32    Calculated the present value of the bonus and analyzed the difference in bonus for the client. (CO 2)  32    Analyzed the tuition costs  for the client and determined what the future costs will be and  determined how these funds can be accumulated over time. (CO 4)  60    Written Components: Organization, usage and mechanics, APA elements, style  44    Total:  200

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