9:30 AM Class Group 3

Math 1070Q Group 3 - 9:30 Class Project Members: Michael Bogush, Frank Caruso, Timothy Gaipa, Blayze Markoya, Steven Panzella, Shawn Smith (1) 0. 35000 -2100 1. 72100 ˆ 4326 2. 111426 ˆ 6,685.56 3.153111.56 ˆ 9,186.6936 4. 197298.2536 ˆ 11837.89522 5. 244136.148 ˆ 14648.1689 6. 293784.316 ˆ 17627.0590 7. 346411.375 ˆ 20784.6825 8. 402196.057 ˆ 24131.7634 9. 461327.82 ˆ 27679.6692 10. 524007 ˆ 31440.4493 11. 590447.938 ˆ 35426.8763 12. 660874.814 ˆ 39652.4888 13. 735527.302 ˆ 44131.6381 14. 814658.940 ˆ 48879.5364 15. 898538.476 ˆ 53912.3085 16. 987450.784 ˆ 59247.0470 17. 1081697.83 ˆ 64901.8698 18. 1181599.7 ˆ 70895.9819 19. 1287495.68 ˆ 77249.7409 20. $1,364,745.42 TOTAL (2) A=P(1+r/n)^ntA = 700000(1+.06/1)^.120A= $2,244,994.83 TOTAL (3) 1364745.42=P(1+.06/1)^.120P= $425,534.07 TOTAL (4) Lump sum payment with out investment gives you a greater amount of money at once, but at the same time you are losing a good portion of your money because of taxes. If it is a lump sum payment with investment, you would be getting a much greater amount then with out investment, because of the ability to attain a positive return on the investment. If you were to take payments with annuity you would be getting more money than if you were to take it as a lump some with out investment. But the con to this is that it would take far too long to acquire the money you won. Patience would be virtue. (5) In order to simplify this assignment, we assumed that certain factors such as tax and earnings from interest would remain at fixed rates. In the problem, federal income tax was 25%, CT income tax would be 5%, and the returns on investment was said to be 6% per year, with both federal and income taxes paid from that income and the remainder invested. While it is obvious that in real-world situations, factors such as federal and state taxes would be variable rather than fixed rates, and also obvious that cash flow from investments could vary greatly from year to year, we omitted them in order to simplify our assignment and make the calculations. If we did not do this, it would have been virtually impossible to calculate the amount of money one would have due to real-world conditions that effect tax and investments greatly, all of which are out of our hands (for example: inflation, a depression, recession, stock market crash, etc.).