7. Carlos Primero is a 30-year old employee earning P400,000 per annum. He intends to retire at the age of 40 so that he can engage in his own business. However, he would want to earn a fixed income from a portfolio to maintain his current standard of living. Inflation rate is 4% and investments are expected to realize 8% per annum. How much must be the value of his portfolio at the age of 40? 8. Assuming that the value of Carlos Primero's portfolio at the age of 40 should be P6,000,000, how much should be his target savings goal? 9. Inasmuch as Carlos in No. 7 will be able to live on P150,000 per month upon retirement, what should be the rate of return on the portfolio if he can afford to contribute P100,000 per annum only?

7. Carlos Primero is a 30-year old employee earning P400,000 per annum. He intends to retire at the age of 40 so that he can engage in his own business. However, he would want to earn a fixed income from a portfolio to maintain his current standard of living. Inflation rate is 4% and investments are expected to realize 8% per annum. How much must be the value of his portfolio at the age of 40? 8. Assuming that the value of Carlos Primero's portfolio at the age of 40 should be P6,000,000, how much should be his target savings goal? 9. Inasmuch as Carlos in No. 7 will be able to live on P150,000 per month upon retirement, what should be the rate of return on the portfolio if he can afford to contribute P100,000 per annum only?

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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Similar questions

Charlie Brown, a 25 year old professional, invests $200 a month in the XYZ Capital Opportunity Fund, which has a 10-year average return of 8.75%. a. Charlie wants to estimate what he will have for retirement when he is 60 years old if the rate stays constant. Assume monthly compounding. b. if Charlie makes no further deposits and makes no withdrawals after the age 60, how much will he have for retirement at age 65?
Suppose you are currently 18 years old, and you wish to retire at 58. You want to have $1,000,000 when you retire, and you believe the stock market will give you a return of 11% monthly. How much do you need to invest each month?
You are planning your retirement in 10 years. You currently have $161,000 in a bond account and $601,000 in a stock account. You plan to add $7,900 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 10.75 percent and the bond account will earn a return of 7.25 percent. When you retire, you plan to withdraw an equal amount for each of the next 24 years at the end of each year and have nothing left. Additionally, when you retire you will transfer your money to an account that earns 6.5 percent. How much can you withdraw each year in your retirement? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Annual withdrawal amount $ 188,765.43
solve b question
It is with deep regret that I inform you that your rich uncle just passed away. His money is tied up in an investment. However, we can sell the investment and give you $15,000 today, or you will receive $20,000 in 5 years when the investment matures. Which would you choose? Use March 2023’s inflation rate (5%)
1. You want to have an income of $50,000 per year in retirement, and you think you will be alive for 30 years in retirement. How much do you need to have invested the day you retire, in real dollars, assuming a 3% real rate of return?
None
After some calculations, you realize that your inflation - adjusted retirement income shortfall is $44, 244 per year. You anticipate that once you retire, you will be retired for 36 years. How much at a minimum should you have saved at the time of your retirement, if you estimate that your 60/40 equity/debt retirement portfolio will have a real (net of inflation) return of 5.29% on average? For simplicity, assume that once you retire you will be withdrawing the necessary amount from your portfolio at the end of each year.
Marco is 45 years old and plans to retire at age 66. He wants you to assume he will be retired for 18 years before he dies. Assume Marco needs $50,504 at the beginning of the first year of retirement. Use an investment return of 7 percent and an inflation assumption of 3 percent. What amount of money will he need to have saved at the beginning of retirement? (Round any interest rate calculations to 4 decimal places e.g. .0125 for 1.25% and round the final answer to 2 decimal places)
You want to investment for retirement. You inherited $50,000 in April 2020. The Stock Market has lost 20% of its value from its high in 2019. Should you: A. Wait for the Stock Market to go down another 10 Percent? B. Invest the entire $50,000 now? C. Invest a small amount each month starting this month. Explain why you selected one of the strategies above.
A 30 year - old person plans to retire at 64 and live until 92. During retirement, the person will take a growing annuity from the retirement account. The amount in the first year will be $90,000 with a 2% growth rate. The return on savings before retirement is 9%, an after retirement is 6%. Initial savings are zero, and the person does not want to leave a legacy at the time of death. How much must the person save per year before retirement to achieve this goal?

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