10. Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to be 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security retirement benefit in today's dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? $6,245. b. $7,659. a. C. $8,432. d. $9,252.

10. Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to be 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security retirement benefit in today's dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? $6,245. b. $7,659. a. C. $8,432. d. $9,252.

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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Bella is 23 years old and wants to invest money for her retirement. She wants to have $2,000,000 saved up when she retires at age 65. A) If she can earn 10% per year in an equity mutual fund, calculate the amount of money she would have to invest in equal annual amounts to achieve her retirement goal. B) Alteratively, how much would she have to invest in equal monthly amounts starting at the end of the current year or monthly respectively.
Janine is 25 and has a good job at a biotechnology company. Janine estimates that she will need $946,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $24,500 a year. (She expects that Social Security will pay her an additional $16,000 a year.) She currently has $7,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 6 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have to accumulate in her company's 401(k) plan over the next 40 years in order to reach her retirement income goal? Use Exhibit 1-A. (Round time value factor to 3 decimal places. Round intermediate and final answer to 2 decimal places.) 401(k) accumulation
Ed wants to start saving for retirement by investing in his 401(k). Over the next 30 years, he wants to save up a total of $1,000,000. He will make contributions from his monthly paychecks (his annual salary is $144,000) and his employer will match 25% of his contributions. What percent of each monthly paycheck does he need to contribute to his 401(k) to meet his goal, if his account earn 8% interest? O 3.47% O 3.12% 4.86% O 4.47%
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Problem 13-78 Part b (Static) b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the traditional IRA)?
Molly Lincoln, a 25-year-old personal loan officer at First National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $3,500 per year for her retirement fund and assumes that she'll retire at age 65. How much will Molly have accumulated when she turns 65 if she invests in equities and earns 8 percent on average? Round your answer to the nearest dollar. Molly is urging her friend, Isaac Stein, to start his plan right away, too, because he's 45. What would his nest egg amount to if he invested in the same manner as Molly and he, too, retires at age 65? Round your answer to the nearest dollar. 2a. Nest egg at 4% 2b. Nest egg at 8%
George plans to retire in 15 years. His current household expenses are $91000 per year. He estimates that when he retires, he will no longer have $4400 in monthly mortgage payments, $6600 in annual commuting expenses, and $28000 in annual budgeted 401(k) contributions. However, he does expect that his health-care costs will rise by $5300 per year and his entertainment expenses to total $8800 each year. What will be his estimated retirement expenses, in today’s dollars, if using the adjusted expense method? $17700 $8950 $60800
Marc has nothing saved for retirement. He wants to receive $46,000.00 per year for 5 years during retirement. The first of these payments will be received in 7 years. Marc can earn a return of 9.38 percent per year. How much does Marc need to save each year for 6 years to have exactly enough to meet his retirement goal if he makes his first annual savings contribution in 1 year and all savings contributions are equal? O $21,324.88 (plus or minus 10 dollars) O $25,513.05 (plus or minus 10 dollars) O $23,325.15 (plus or minus 10 dollars) O $20,819.31 (plus or minus 10 dollars) O none of the answers are within 10 dollars of the correct answer
Simon just turned 66 and is trying to decide whether to take his Social Security benefits today or to wait until he is 70. The risk-free rate of interest is 2%, and Simon anticipates that this rate will not change in the foreseeable future. If Simon decides to take his benefits at age 66 (his current age), he will get 12*$2,216 = $26,592 per year. If he waits 4 years, he will get $3,067 per month. 1) Simon estimates that he will die on his 85th birthday. Should he wait until 70 or take the Social Security now? Note: In doing this problem, assume that benefits are paid at the end of the year in which they are taken. Also assume that Simon will die exactly on his birthday. Your Retirement Benefit Estimate The amount you receive when you first start your benefits sets the base amount you will get for the rest of your life. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of Jime. Assuming you continue earning about the same…
Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $50,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24 additional annual payments. Annual inflation is expected to be 3%. He currently has $235,000 saved, and he expects to earn 9% annually on his savings. How much must he save during each of the next 10 years (end-of-year deposits) to meet his retirement goal? Do not round intermediate calculations. Round your answer to the nearest dollar.
Earl Ezekiel wants to retire in San Diego when he is 65 years old. Earl is now 49. He believes he will need $470,000 to retire comfortably. To date, Earl has set aside no retirement money. Assume Earl gets 10% interest compounded semiannually. How much must Earl invest today to meet his $470,000 goal? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Investment
Ruby is 25 and has a good job at a biotechnology company. She currently has $10,400 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Ruby estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). a. How much will Ruby's IRA be worth when she needs to start withdrawing money from it when she retires? Use Exhibit 1-A (Round FV factor to 3 decimal places and final answer to the nearest whole dollar.) Future value of IRA b. How much money will she have to accumulate in her company's 401(k) plan over the next 40 years in order to reach her retirement income goal? (Round your answer to the nearest whole dollar.) Required future value of 401(k)
Courtney wants to retire in 15 years when she turns 62. She wants to have enough money to replace 75% of her current income less what she expects to receive from Social Security at the beginning of each year. Courtney expects to receive $25,714 per year from Social Security in today’s dollars at full retirement age of 67. However, she will take Social Security early at age 62, when she retires. Courtney is aggressive and wants to assume an 8% annual investment rate of return and that inflation will be 3% per year. Based on her family history, Courtney expects that she will live 30 years in retirement (age 92). If Courtney currently earns $80,000 per year and she expects her raises to equal the inflation rate, how much does she need at retirement to fulfill her retirement goals? $874,794. $1,022,807. $1,072,458. $1,583,152.

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