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 friend is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retirement spending goals. Years until retirement: 30 Amount to withdraw each year: $120,000 Years to withdraw in retirement: 25 Interest rate: 7.5% Because your friend is planning ahead, the first withdrawal will not take place until one year after she retires. She wants to make equal annual deposits into her account for her retirement fund. Required: Now assume that the inflation rate is 3%. Consequently, when your friend retires she will want to withdraw $120,000 each year in today’s dollars. What amount is she planning to receive in year 31 (the end of her first year of retirement)? How much does she need to have in retirement at the end of year 30 in order to receive her retirement payments assuming that these retirement payments continue to increase at 3% per year throughout her retirement?…
Maryam's retirement scheme is in such a way that for the present year, she invests QR 250,000 (as Present Cash outflow) and she expects of the asset of QR 700,000 (Cash inflow) over 20 years. Assuming no deposits (A) made to his retirement account over the aforementioned 20 year period, what annual rate of return did she make? Hint: You may use RATE function in MS Excel to calculate the annual rate of return. 8.00% 4.22% 3.13% 5.28%
Jeni has decided that she needs to start saving for her retirement. She can afford $100 a month deducted automatically from her paycheck. She deposits it into an account that earns 4.5% interest compounded monthly. How much will she have in her account when she retires 42 years later? A. $ 14,922.70 B.$ 50,400.00 C. $132,213.00 D. $149,226.96
Marco is plans to retire in 18 years. He wants you to assume he will be retired for 15 years before he dies. You calculated that Marco needs $1,760,621 as a lump sum at the beginning of retirement. Use an investment return of 5 percent and an inflation assumption of 3.3 percent. How much money will he need to save monthly to have this amount when he begins retirement? (Round the final answer to 2 decimal places)
4. Amy Johnson wants to retire on $75,000 per year for her life expectancy of 20 years after she retires. She estimates that she will be able to earn an interest rate of 10.1%, compounded annually, throughout her lifetime. To reach her retirement goal, Amy will make annual contributions to her account for the next 30 years. One year after making her last deposit, she will receive her first retirement check. How large must her yearly contribution be?
Janet Woo decided to retire to Florida in 7 years. What amount should Janet invest today so she can withdraw $55,000 at the end of each year for 20 years after she retires? Assume Janet can invest money at 7% compounded annually. (Use the Table 13.2 and Table 12.3.) (Do not round intermediate calculations. Round your answer to the nearest cent.)
Your parents will retire in 17 years. They currently have $290,000 saved, and they think they will need $2,000,000 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.
You want to leave a small amount for two of your children, Kira, aged 68 and Fred, aged 63. Kira will retire at 70 (t = 2), as will Fred (t = 7). You want each to have $500,000 per year for the rest of their lives, payable at the beginning of each year. You expect each to live to 95. The annual interest rate is expected to be 9%. How much money would you need to deposit today in an account to fund these kids' retirement?
Mary wants to retire in 37 years with $1 million in her retirement account. To that end she decides to save money every year in a savings plan that pays 11.3 percent annually. Her first contribution will occur at the end of the year (one year from today). She needs to save $__________ each year to the savings plan. Round it to two decimal places and do not include the $ sign, e.g., 1234.56.
Suppose a husband wants to take his wife on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $24,000 inheritance from an uncle and intends to invest it for the trip. The husband estimates the trip will cost $31,000 and he believes he can earn 8% interest, compounded annually, on his investment. Complete the following table to calculate the future value. Will he be able to pay for the trip with the accumulated investment amount? Note: Use tables, Excel, or a financial calculator. Round your final answers to the nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
a) When you retire 40 years from now, you want to have $1.2 million. You think you can earn an average of 12 percent on your investments. To meet your goal, you are trying to decide whether to deposit a lump sum today, or to wait and deposit a lump sum 2 years from today. How much more will you have to deposit as a lump sum if you wait for 2 years before making the deposit? b) Some time ago, Julie purchased eleven acres of land costing $36,900. Today, that land is valued at $214,800. How long has she owned this land if the price of the land has been increasing at 10.5 percent per year?
Two people plan to invest $50,000. Matt is going to invest it in one lump sum and leave it in the account for 25 years to use for retirement. Sarah is going to invest $2000 per year for 25 years and will also use the money in the account for retirement. Is it reasonable to expect that Matt will have more money in his account than Sarah does in 25 years if both accounts earn the same interest?

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