34. At age 20, you begin depositing $50 each month into an account. Now suppose that at age 40, you finally get a job where your employer puts $400 per month into an account. You continue your $50 deposits, so from age 40 on, you have two separate accounts working for you. Assume that each account considered has an APR of 6% compounded monthly. What will be the total value of your nest egg when you retire at age 65? (total sum of two accounts)

34. At age 20, you begin depositing $50 each month into an account. Now suppose that at age 40, you finally get a job where your employer puts $400 per month into an account. You continue your $50 deposits, so from age 40 on, you have two separate accounts working for you. Assume that each account considered has an APR of 6% compounded monthly. What will be the total value of your nest egg when you retire at age 65? (total sum of two accounts)

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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Suppose that you start working for a company at age 25. You are offered two rather unlikely, but quite enticing, retirement plans from which you are allowed to choose one. [Round all answers to the nearest dollar.] Retirement plan 1: When you retire, you will receive $16,000 for each year of service. Retirement plan 2: When you start work, the company deposits $2500 into a savings account that is guaranteed to pay a yearly rate of 16%. When you retire, the account will be closed and the balance given to you. A. Determine the amount you would receive under plan 1, if you retired at age 55. $ B. Determine the amount you would receive under plan 1, if you retired at age 65. C. Determine the amount you would receive under plan 2, if you retired at age 55. D. Determine the amount you would receive under plan 2, if you retired at age 65.
Suppose you want to have $700,000 for retirement in 35 years. Your account earns 9% interest. a) How much would you need to deposit in the account each month? b) How much interest will you earn?
Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $60,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 6.6% per year simple interest, how much money needs to be in the account by the time you reach your 70th birthday?
Your employer automatically puts 5 percent of your salary into a 401(k) retirement account each year. The account earns 8% interest. Suppose you just got the job, your starting salary is $50000, and you expect to receive a 3% raise each year. For simplicity, assume that interest earned and your raises are given as nominal rates and compound continuously. Find the value of your retirement account after 35 years Value = $
Suppose a recent college graduate's first job allows her to deposit $100 at the end of each month in a savings plan that earns 12%, compounded monthly. This savings plan continues for 6 years before new obligations make it impossible to continue. If the accrued amount remains in the plan for the next 15 years without deposits or withdrawals, how much money will be in the account 21 years after the plan began? (Round your answer to the nearest cent.) $
2.
You want to retire on the day you have $900,000 in your savings account. You expect to earn 6 percent, compounded monthly, on your money during your retirement. Your plan is to withdraw $5,750 a month as retirement income from this account. How many years can you be retired until you run out of money? A) 24.75 B) 24.91 C) 25.20 D) 25.50 (Please try to explain by using a Financial Calculator)
When you retire at 65, you wish to be able to have $3,000 each month for 25 years. How much would you have to deposit into an account each month, starting when you are 23, if the account earns 7.6% compounded monthly?
Prescott Pharmaceuticals will pay an annual dividend of $0.88 one year from now at t=1. Analysts expect this dividend to grow at 18.5% per year thereafter until the end of year 21. Dividends are then expected to be stable until t=31. Afterwards, dividends decline at a rate of 4.4% annually (the dividend at t=32 is 4.4% smaller than the payment at t=31) and are paid in perpetuity. a) According to the dividend-discount model, what is the value of a Prescott Pharmaceuticals share if the firm's cost of equity capital is 15.0%?. The value of per share is $ (Round your answer to the nearest cent)
Suppose you want to have $500,000 for retirement in 35 years. Your account earns 6% interest. How much would you need to deposit in the account each month?
You are 30 years old today. You want to retire at the age of 55. You expect to live until age 90. You would like to have a monthly income of $9,000 per month in retirement. How much do you have to save per month during your working years in order to achieve your retirement goal? Assume end of period payments. Assume an annual interest rate of 3.5% in retirement and 5% during your working life. How much do you have to save per month during your working years in order to achieve your retirement goal? $ (Round to the nearest cent.)
Suppose that you just turned 25, plan to retire at 65, and estimate that you will need $9,049 per month at the end of each month upon retirement for the next 30 years. How much do you need to contribute at the end of each month until you reach age 50? Assume your estimated return is 8.8% EAR, that you have $10,000 already invested, and the funds will continue to earn interest to age 65, even though you will not continue contributing after age 50.

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