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132. Your firm needs to buy additional physical therapy equipment that costs $27,000. The
equipment manufacturer will give you the equipment now if you will pay $7,000 per year for the
next five years. Assume your firm can borrow at a 13 percent interest rate. You need to analyze if
your firm should pay the manufacturer the $27,000 now or accept the five-year annuity offer of
$7,000. Which of the following statements is correct?
133. Your firm needs to buy additional physical therapy equipment that costs $35,000. The
equipment manufacturer will give you the equipment now if you will pay $8,000 per year for the
next five years. Assume your firm can borrow at a 3 percent interest rate. You need to analyze if
your firm should pay the manufacturer the $35,000 now or accept the five-year annuity offer of
$8,000. Which of the following statements is correct?
134. You started your first job after graduating from college. Your company offers a retirement
plan for which the company contributes 50 percent of what you contribute each year. You expect
to contribute $4,000 per year from your salary. You decide to invest the contributions in assets
that you expect to earn 8 percent per year. If you plan to retire in 35 years, how big will you
expect that retirement account to be?
135. You started your first job after graduating from college. Your company offers a retirement
plan for which the company contributes 25 percent of what you contribute each year. You expect
to contribute $5,000 per year from your salary. You decide to invest the contributions in assets
that you expect to earn 8 percent per year. If you plan to retire in 35 years, how big will you
expect that retirement account to be?
136. You started your first job after graduating from college. Your company offers a retirement
plan for which the company contributes 50 percent of what you contribute each year. You expect
to contribute $2,000 per year from your salary. You decide to invest the contributions in assets
that you expect to earn 10 percent per year. If you plan to retire in 40 years, how big will you
expect that retirement account to be?
137. Sally saves $500 per month in her retirement plan. She plans on making monthly
contributions for 35 years. If her account earns a 12 percent annual interest rate, how much will
she have at the end of 35 years and what percent of the total are her out-of-pocket
contributions?
138. Jane has been saving $500 in her retirement account each month for the last 20 years
and plans to continue contributing $500 each month for the next 20 years. Her account has been
earning an 8 percent annual interest rate and she expects to earn the same rate for the next 20
years. Her twin brother, Hal, has not saved anything for the last 20 years. Due to sibling rivalry,
he wants to have as much as Jane is expected to have at the end of 20 years. If Hal expects to
earn the same annual interest rate as Jane, how much must Hal save each month to achieve his
goal?
139. Jane has been saving $450 in her retirement account each month for the last 20 years
and plans to continue contributing $450 each month for the next 20 years. Her account has been
earning a 9 percent annual interest rate and she expects to earn the same rate for the next 20
years. Her twin brother, Hal, has not saved anything for the last 20 years. Due to sibling rivalry,
he wants to have as much as Jane is expected to have at the end of 20 years. If Hal expects to
earn the same annual interest rate as Jane, how much must Hal save each month to achieve his
goal?
140. Jane has been saving $200 in her retirement account each month for the last 20 years
and plans to continue contributing $200 each month for the next 20 years. Her account has been
earning an 8 percent annual interest rate and she expects to earn the same rate for the next 20
years. Her twin brother, Hal, has not saved anything for the last 20 years. Due to sibling rivalry,
he wants to have as much as Jane is expected to have at the end of 20 years. If Hal expects to
earn the same annual interest rate as Jane, how much must Hal save each month to achieve his
goal?
141. Your current $95,000 mortgage calls for monthly payments over 30 years at an annual
rate interest rate of 6 percent. If you pay an additional $50 each month beginning with the first
payment, how soon do you pay off your mortgage?
142. Your current $115,000 mortgage calls for monthly payments over 30 years at an annual
rate interest rate of 7 percent. If you pay an additional $50 each month beginning with the first
payment, how much interest expense do you save by pre-paying?
143. Your current $155,000 mortgage calls for monthly payments over 25 years at an annual
rate interest rate of 6 percent. If you pay an additional $50 each month beginning with the first
payment, how much interest expense do you save by pre-paying?
144. After saving diligently your entire career, you and your spouse are ready to retire with a
nest egg of $600,000. You need to invest this money in a mix of stocks and bonds that will allow
you to earn $5,000 per month for 30 years. What annual interest rate (APR) do you need to earn?
