1. Marcus would like to save up $3 million for his retirement. He has chosen a stock index fund that has an average APR of 7.2%. He plans to draw on the funds at 70 years old which gives him 40 years to save. (a) How much should Marcus save monthly to meet his retirement goal? (b) How much of the future value of $3 million is interest? Give the answer both in dollars and as a percentage of the total funds. 2. Simone bought her house for $150,000 in 2000 and sold it for $725,000 in 2020. What are the total and annual returns on this investment?

1. Marcus would like to save up $3 million for his retirement. He has chosen a stock index fund that has an average APR of 7.2%. He plans to draw on the funds at 70 years old which gives him 40 years to save. (a) How much should Marcus save monthly to meet his retirement goal? (b) How much of the future value of $3 million is interest? Give the answer both in dollars and as a percentage of the total funds. 2. Simone bought her house for $150,000 in 2000 and sold it for $725,000 in 2020. What are the total and annual returns on this investment?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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It is with deep regret that I inform you that your rich uncle just passed away. His money is tied up in an investment. However, we can sell the investment and give you $15,000 today, or you will receive $20,000 in 5 years when the investment matures. Which would you choose? Use March 2023’s inflation rate (5%)
Jackie wants to retire with $ 2.1 million in savings by the time she turns 64. She is currently 23 years old. How much will she need to save each year, assuming she can get a 10% annual return on her investments? (show all inputs in your answer Training )M = N = I = PV = PMT = FV =
You have just turned 21 and you are planning for your retirement. You would like to retire at age 65 (44 years from now), at which time you will begin withdrawing funds from your retirement account. You would like to take a total of 26 withdrawals, with your first withdrawal of $150.000 at. Year 65, and your last withdrawal at Year 90 . In order to account for inflation, your withdrawals in Year 66 through Year 90 will increase by 4.0 percent each year (i.e., a growing annuity; the withdrawal for Year 66= $150,000⋅1.04=$156,000, etc.). You currently have $30.000 in your retirement account and believe that you can earn an effective annual rate of return of 7.84 percent over time. Given this information, determine how much you would have to deposit in your retirement account, each year, at Years 21 - 64 (a total of 44 deposits), in order for you to be able to meet your retirement goals
David Quincy wants to withdraw $30,800 each year for 10 years from a fund that earns 10% interest. Click here to view factor tables. How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.) First withdrawal at year-end First withdrawal immediately
Are annuities good investments? To answer this question, consider the situation of John. He is 50 years old and can purchase a lifetime annuity for $100,000. The annuity pays John $8,000 per year for the rest of his life. If John lives to be 85, what rate of return will he earn on this investment? What if John only lives to be 77? If John lives to age 85, his IRR is If John lives to age 77, his IRR is ... % per year. (Round to two decimal places.) % per year. (Round to two decimal places.)
Marco is 45 years old and plans to retire at age 66. He wants you to assume he will be retired for 18 years before he dies. Assume Marco needs $50,504 at the beginning of the first year of retirement. Use an investment return of 7 percent and an inflation assumption of 3 percent. What amount of money will he need to have saved at the beginning of retirement? (Round any interest rate calculations to 4 decimal places e.g. .0125 for 1.25% and round the final answer to 2 decimal places)
You want to investment for retirement. You inherited $50,000 in April 2020. The Stock Market has lost 20% of its value from its high in 2019. Should you: A. Wait for the Stock Market to go down another 10 Percent? B. Invest the entire $50,000 now? C. Invest a small amount each month starting this month. Explain why you selected one of the strategies above.

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