4. You want to have a monthly income of $2000 from a fixed-term annuity when you retire. Take the term of the annuity to be 20 years and assume an APR of 6% over the period of investment. a. How large will your nest egg have to be at retirement to guarantee the income described above? b. You plan to make regular deposits for 40 years to build up your savings to the level you determined for (a). How large must your monthly deposit be?
4. You want to have a monthly income of $2000 from a fixed-term annuity when you retire. Take the term of the annuity to be 20 years and assume an APR of 6% over the period of investment. a. How large will your nest egg have to be at retirement to guarantee the income described above? b. You plan to make regular deposits for 40 years to build up your savings to the level you determined for (a). How large must your monthly deposit be?
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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Transcribed Image Text:4. You want to have a monthly income of $2000 from a fixed-term annuity when
you
retire. Take the term of the annuity to be 20 years and assume an APR of 6% over the
period of investment.
a. How large will your nest egg have to be at retirement to guarantee the income
described above?
b. You plan to make regular deposits for 40 years to build up your savings to the
level you determined for (a). How large must your monthly deposit be?
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