5. Loretta is 30 years old and has wanted to be a millionaire by the time she is 50. Herinvestments usually provide an annual rate of return of 12%.a) If she makes an initial investment of $25,000, how much of a regular monthly payment shouldshe make so that after 20 years she will accumulate $1,000,000?b) If she makes no initial investment, how much of a regular monthly payment should she makeso that after 20 years she will accumulate $1,000,000?c) If she makes an initial investment of $25,000, how much of a regular monthly payment shouldshe make so that after 30 years she will accumulate $1,000,000?

Summary of Results:Part (a): Monthly payment of $735.59 with an initial $25,000 investment over 20…

Answered: 5. Loretta is 30 years old and has…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 9FPE

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12) What annual rate of return would Jia need to earn if she deposits $20,000 per year into an account beginning one year from today in order to have a total of $1,000,000 in 30 years?
6. If you desire to have $80,000 for a down payment for a house in 7 years, what amount would you need to deposit each year for these 7 years? Assume that your money will earn 10 percent per year. 7. Kate deposits $9,900 each yearinto her retirement account. If these funds have an average earning of 11 percent over the 40 years until her retirement, what will be the value of her retirement account?
4. A couple decides to invest some money in an account for use during retirement. Their goal is to have $100,000 in 40 years. The account pays 5.5% compounded monthly. A. How much do they need to invest to meet their goal? B. How much interest will they earn? C. What is the annual percentage yield? D. Prepare a table that shows the growth of the investment.
c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70.If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age?
b. Jamie wants to have $2,000,000 for her retirement in 25 years. How much should she save annually if she thinks she can earn 8% on her investments?
13. You have just made your first $4,000 contribution to your retirement account. Assuming you earn an 11 percent rate of return and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? (Does this suggest an investment strategy?). 14. You are saving up for a down payment on a house. You will deposit $600 a month for the next 24 months in a money market fund. How much will you have for your down payment in 24 months if the fund earns 12% APR compounded monthly?
You are hoping to buy a house in the future and recently received an inheritance of $16, 000. You intend to use your inheritance as a down payment on your house. a. If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will it be before your inheritance grows to $33, 000? b. If you let your money grow for 9.5 years at 8 percent, how much will you have? c. How long will it take your money to grow to $33, 000 if you move it into an account that pays 3 percent compounded annually? How long will it take your money to grow to $33, 000 if you move it into an account that pays 12 percent? d. What does all this tell you about the relationship among interest rates, time, and future sums?
Monica has decided that she wants to build enough retirement wealth, if invested at 10 percent per year, to provide her with $4,000 c monthly income for 20 years. To date, she has saved nothing, but she still has 25 years until she retires. How much money does she need to contribute per month to reach her goal? First compute how much money she will need at retirement, then compute the monthly contribution to reach that goal. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Contribution per month
Suppose marsha plans to invest $1000 at the beginning of each year for the next 5 years. She expects to earn 13 percent per year. 1.how much will marsha have in 5 years 2.how much would marsha need to deposit today in order to have the same results?
Suppose Ted deposits $10,000 in a savings plan earning 5% compounded annually and Tess deposits $10,000 in a savings plan earning 10% compounded annually. Both leave their money on deposit for 40 years. Because Tess’s rate is twice as great as Ted’s rate, is it true that Tess will earn twice as much interest? Explain why or why not. Then show calculations to prove your point of view. What is the future value for each investment?
1. If you want to have $500,000 when you retire and you put $85,000 in your retirement account right now, and you can get an interest rate of 5.2% a year, how many years will it take you to achieve your goal? 2. Sammy decides to set up a retirement fund. He deposits $7,000 a year. He earns an annual interest rate of 4.5. How much will Sammy have in his retirement fund in 25 years? 3. Sammy wants to see what his retirement fund would be if he made $7,000 deposits at the first of every year instead of at the end. How much will Sammy have im his retirement fund in 25 years at the rate of 4.5% if the deposits are made at the beginning of the year? 4. Sammy wants to help a fellow small business owner. The other owner, Mr. Noles offers to pay Sammy $4,250 a year for 8 years in exchange for a loan of $28,000. If the interest rate is 4.2%, is this a good investment for Sammy? What is the present value of this annuity?
A 20-year old woman wants to retire as a millionaire by the time she turns 50. How much will she have to save at the end of each year if she can earn 5% compounded annually, to have $100,000 by the time she is 50?

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