QUESTION

# value of money ** see attached files**

As the manager of the pension fund, considering different investment options will help you make better decisions for your company and your clients. Please respond to the following questions, providing supporting data and showing your calculations. Before starting your calculations, review the following materials: time value of money analysis valuing perpetuities and annuities amortizing a loan

Question 1: If the pension plan invests $95 million today in 10-year US Treasury bonds (riskless investment with guaranteed return) at an interest rate of 3.5 percent a year, how much will it have by the end of year 10? Question 2: If the pension plan needs to accumulate$14 million in 13 years, how much must it invest today in an asset that pays an annual interest rate of 4 percent?

Question 3: How many years will it take for $197 million to grow to be$554 million if it is invested in an account with a quoted annual interest rate of 5 percent with monthly compounding of interest?

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