Economics3. Sarah wants to have $2,000,000 in net worth when he retires. To achieve this goal, she plans toinvest $1,000 each year (starting one year from now) into an account of time that earns 10%interest rate compouris how many years?a. 31.94 (32 yb. 55.64 (56 ye25.56 (26 years)d. 20.36 (20 years)ually. The amount of time Sarah can retire as a multimillionaireC.

in this we have to find future value of ANNUITY to get future value.

3. Sarah wants to have $2,000,000 in net worth when he retires. To achieve this goal, she p invest $1,000 each year (starting one year from now) into an account of time that earr interest rate compour is how many years? a. 31.94 (32 y b. 55.64 (56 ye ually. The amount of time Sarah can retire as a multimilli

3. Sarah wants to have $2,000,000 in net worth when he retires. To achieve this goal, she p invest $1,000 each year (starting one year from now) into an account of time that earr interest rate compour is how many years? a. 31.94 (32 y b. 55.64 (56 ye ually. The amount of time Sarah can retire as a multimilli

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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A couple thinking about retirement decide to put aside $12,500 each year in a savings plan that earns 7.50% interest. In 9 years they will receive a gift of $89,500 that also can be invested. a. How much money will they have accumulated 27 years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Accumulated savings $ b. If their goal is to retire with $1,648,383 of savings, how much extra do they need to save every year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Mary is going to receive a 38-year annuity of $10,300 per year. Nancy is going to receive a perpetuity of $10,300 per year. If the appropriate interest rate is 11 percent, how much more is Nancy's cash flow worth? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Present value
Your parents will retire in 26 years. They currently have $360,000 saved, and they think they will need $1,050,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
Your parents will retire in 23 years. They currently have $300,000 saved, and they think they will need $2,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places. %
Sherry has a goal of retiring with $427,480 by making weekly deposits into an investment account whose annual interest rate is 1.1%. If she will retire in 25 years, how much interest will she earn?
Janet Woo decided to retire to Florida in 6 years. What amount should Janet invest today so she can withdraw$50,000 at the end of each year for 20 years after she retires? Assume Janet can invest money at 6% compoundedannually.
You would like to provide $113,000 a year forever for your heirs. How much money must you deposit today to fund this goal if you can earn a guaranteed 8.2 percent rate of return? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
2. Jack and Jill have just had their first child. If college is expected to costP150,000 per year in 18 years, how much should the couple begin depositing annually at the end of each year to accumulate enough funds to pay the first year's tuition at the beginning of the 19th year? Assume that they can earn a 6% annual rate of return on theirinvestment.
Your parents will retire in 26 years. They currently have $230,000 saved, and they think they will need $1,250,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
A couple will retire in 50 years; they plan to spend about $34,000 a year (in current dollars) in retirement, which should last about 25 years. They believe that they can earn a real interest rate of 7% on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Annual savings $ Annual savings 761.74 b. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $64,000 on their child's college education? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 1,370.95
Your parents will retire in 19 years. They currently have $200,000 saved, and they think they will need $1,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.

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