2. You invest $12,000 a year in to a retirement fund starting at age 25 and continue to do so until the age of 55. You also plan to increase the investment by $1000each year starting when you are 37 ($13,000), 38 ($14,000) through age 55. You plan to retire at age 65 with $1,000,000 in your retirement account.a. Created the needed cash flow diagramb. What average annual interest rate (nearest 2%) must your retirement account produce? Do you think this interest rate is reasonable for your retirementplanning?c. Is it reasonable to increase your contribution $1,000 a year starting at age 37 through age 55? What would your contribution be per year at age 55?d. What would happen if you retired at 60 instead of 65?Solve the problem using an Excell spreadsheet.

As you have asked a question with multiple parts, we will solve the first 3 parts as per Bartleby…

2. You invest $12,000 a year in to a retirement fund starting at age 25 and continue to do so until the age of 55. You also plan to increase the investment by $1000 each year starting when you are 37 ($13,000), 38 ($14,000) through age 55. You plan to retire at age 65 with $1,000,000 in your retirement account. a. Created the needed cash flow diagram b. What average annual interest rate (nearest %%) must your retirement account produce? Do you think this interest rate is reasonable for your retirement planning? c. Is it reasonable to increase your contribution $1,000 a year starting at age 37 through age 55? What would your contribution be per year at age 55? d. What would happen if you retired at 60 instead of 65? Solve the problem using an Excell spreadsheet.

2. You invest $12,000 a year in to a retirement fund starting at age 25 and continue to do so until the age of 55. You also plan to increase the investment by $1000 each year starting when you are 37 ($13,000), 38 ($14,000) through age 55. You plan to retire at age 65 with $1,000,000 in your retirement account. a. Created the needed cash flow diagram b. What average annual interest rate (nearest %%) must your retirement account produce? Do you think this interest rate is reasonable for your retirement planning? c. Is it reasonable to increase your contribution $1,000 a year starting at age 37 through age 55? What would your contribution be per year at age 55? d. What would happen if you retired at 60 instead of 65? Solve the problem using an Excell spreadsheet.

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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Creating a retirement fund Personal Finance Problem To supplement your retirement, you estimate that you need to accumulate $220,000 exactly 45 years from today. You plan to make equal, end-of-year deposits into an account paying 8% annual interest. a. How large must the annual deposits be to create the $220,000 fund by the end of 45 years? b. If you can afford to deposit only $440 per year into the account, how much will you have accumulated in 45 years? (---) a. The annual deposits to create the $220,000 fund by the end of 45 years should be $. (Round to the nearest cent.)
Raymond just inherited $10000. How much should Raymond deposit in an account earning 6% interest per year if he would like to have $18500 in his account in 20 years? Include a cash flow diagram in your solution. urgent
You have $100,000 in your savings account and plan to retire with $750,000 in the bank in 40 years. You are hoping to achieve areasonable rate of return on your investments and want to know the target rate you should be looking for. Select one: a. 4.12 b. 3.14 c. 5.16 d. 6.13
Consider a Cash Flow Stream of equal amounts of 1500 dollars for 8 years and a discount rate of 10%. a. Calculate the PVOA and the FVOA, by using the Annuity Formulae that you have learned in your class. b. Calculate the PVAD and the FVAD. c. Show that the PVAD exceeds PVOA. d. Show that the FVAD exceeds FVOA.
Answer the following questions by including the appropriate cash flow diagrams, solution, and final answer. 1. A father decides to establish a savings account for his child’s college education on the day his son is born. Any money put into the account will earn an interest rate of 10%. The father will make a series of annual deposits in equal amounts from the child's 1st birthday through the 18th birthday so the child can make four annual withdrawals from the account in the amount of Php 200,000 on each of his 18th, 19th, 20th, and 21st birthdays. Assuming that the first withdrawal will be made on the child’s 18th birthday, calculate the required 18 equal annual deposits.
Need answers ASAP... If P100 is deposited in a savings account that pays 6% annual interest, what amount has accumulated by the end of the eighth year? How much of this is interest and how much is principal? Draw the cash flow diagram.
Please advise on these time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ? a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?
Suppose you want to withdraw $20,000 at the end of year 3 and another $20,000 at the end of year 5. The account's interest rate is 5% compounded annually. A How much should you deposit now? B) Suppose you realize you can only deposit $10,000 today, but you expect to have more funds available in 1 year. How much must you deposit into the account at the end of year 1 so that you can still make the necessary withdrawals at the end of years 3 and 5?
How much must be deposited today into an account earning 3% interest annually to support annual withdrawal of $1550 a year in perpetuity? b) What if the first withdrawal starts at the end of year 5? Use factor method or interest formulas and draw cash flow diagram
1. Mr COVID is 40 years old and is planning to accumulate 10 million pesos on the day of his retirement, at 60. From this retirement fund, he is going to draw a monthly pension, the first of which to be drawn one year after his retirement day, continuing until he is 90 years old. a. What should the monthly withdrawal be assuming interest at 12% pa compounded monthly. Show the cash flow diagram. b. What must his annual deposit be in order to finance his pension plan if the first deposit is made on his 42nd birthday, continuing it until his retirement day?
Suppose you have estimated that you will need $2,500 per month in your retirement to meet your expenses and live comfortably, and that you have found or chosen a fund (account) which pays monthly interest 4% APR . What principal, or balance, will your account need to maintain in order to be able to pay you this amount each month? Round/take your answer to the nearest cent.
Answer the following questions: 1) Consider the following cash flow: You will receive $500 at the end of years 3 and 4 and $1,000 at the end of year 5. If the interest rate is 7%, what amount received at the present is equivalent to this cash flow? 2) Given the cash flow in the figure below, and i=10% per year. Find V4 (or equivalent worth at n=4) $200 $150 $120 $100 $100 $80 Years 6. 3. 5 Base period 3) Given the cash flow in the figure below, and i=8% per year. Find V3, V4 and V5 (or equivalent worth at third, fourth and fifth year) Rs 500 Rs 400 Rs 300 Rs 200 Rs 80 Rs 80 Rs 40 Years 1 Base period 4) If you want to receive 100,000 $ after 5 years from your bank account, what is the amount that you have to deposit now, if the bank gives 10% interest accumulated annually? 5) A person deposits $5000 now in an account at 14% compounded annually. He wants to withdraw the money when it becomes $ 20,000. How long time will he wait for?

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