Davis is setting an investment plan with $10000 in 445 yearsuntil his retirement. His plan has two phases. In the first 20years the rate of return is 8% per year, compounding semi-annually.In the last 25 years, the rate of return is 10% per yearcompounding annually. Â Â
Required :- A) Calculate the effective ANNUAL interest rate(EAR) Davis receives during the first 20 years of his investment.B) Assume that at the end of the first 20 years. Davis decides towithdraw $5000 from his investment. How much money Davis will havein 45 years? C) If DAvis wishes to have exactly $600,000 in hisaccount when he is retired, which is the rate of return should hehas in the first 20 years? D) Assuming that at the end of the first20, Davis changes his investment strategy and puts exactly $700into a superannuation account at beginning of each month for theinterest rates of 9% for the left 25 years. How much would beaccumulates when he retires by this cash flow only? E) How muchmoney Davis could accumulates for this cash flow alone if he putsthat $700 at the end of each month rather than at the beginning ofeach month for 25 years. F) If at the first day of Davis retirementthe superannuation fund starts to pay him $80,000 per year forever,what is the implied rate of return if the present value of thiscash flow is $800,000?
