a. Suppose that between the ages of 22 and 36, you contribute $9000 per year to a 401(k) and your employer contributes $4500 per year on your behalf. The interest rate is 8.5% compounded annually. What is the value of the 401(k) after 14 years? b. Suppose that after 14 years of working for this firm, you move on to a new job. However, you keep your accumulated retirement funds in the 401(k). How much money will you have in the plan when you reach age 65? c. What is the difference between the amount of money you will have accumulated in the 401(k) and the amount you contributed to the plan? Click the icon to view some finance formulas. CIT a. The value of the 401(k) after 14 years is $ (Do not round until the final answer. Then round to the nearest dollar as needed.)

a. Suppose that between the ages of 22 and 36, you contribute $9000 per year to a 401(k) and your employer contributes $4500 per year on your behalf. The interest rate is 8.5% compounded annually. What is the value of the 401(k) after 14 years? b. Suppose that after 14 years of working for this firm, you move on to a new job. However, you keep your accumulated retirement funds in the 401(k). How much money will you have in the plan when you reach age 65? c. What is the difference between the amount of money you will have accumulated in the 401(k) and the amount you contributed to the plan? Click the icon to view some finance formulas. CIT a. The value of the 401(k) after 14 years is $ (Do not round until the final answer. Then round to the nearest dollar as needed.)

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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You just graduated and started your new job. Your starting salary is $60,000/year. Your employer's 401(k) plan states that your employer will contribute 2% of your salary to your 401(k) regardless of whether you make any contributions or not - this is called a "non-elective contribution". They will also match your contributions, $1-for $1, up to 4% of your salary. Please answer the following questions: How much ($) will your employer contribute to your 401(k) per year if you make $0 contributions? (this is a non-elective contribution from your employer) $ 1200 What is the minimum amount ($) that you must contribute per year to get the maximum match from your employer? $2400 Assume that you make the minimum contribution to get the maximum match from your employer. What is the total amount ($) that will be contributed to your 401(k) for the year, including the employer's non-elective contribution, the employer's matching contribution, and your contribution? $ 6000 Assume that this annual…
1. An employee plans on working and contributing to his retirement account monthly for 30 years and then plans to live off his retirement savings for the next 27 years. He expects his retirement account to eam an APR of 7.5% compounded monthly. If he wants to make $3000 monthly withdrawals from his account during retirement, how much should he contribute to his retirement account monthly during his working years? 2. An employee plans on working and contributing to his retirement account monthly for 32 years and then plans to live off his retirement savings for the next 35 years. He expects his retirement account to eam an APR of 6.3% compounded monthly. He can afford to make S500 monthly contributions to his retirement account. How much money can he withdraw from the account monthly during the 35 years of his retirement? Hints and Assumptions: i. At the end of the retirement period the account will be empty ii. The PV at the time when retirement begins is the FV goal while working, so…
1) In a few short years, you will graduate and enter the workforce. Let us suppose that you and a friend both start working at the age of 23 and decide on very different ways to fund your eventual retirement. In this exercise, we explore these decisions. Neither of you have any savings (P = 0), plan to retire at age 66, and expect to earn 8.4% annual interest, compounded monthly, on all your investments. a) Having taken this class, you decide to start immediately, investing $120 per month. How much money will be in your account in 20 years? b) At this point (you are now 43 years old), you will stop making monthly deposits into your account. Now, the amount you calculated in part (a) will accumulate interest for 23 years (until you are 66 years old). How much is in your account now? Indicoob selled pham
Today is your 22nd birthday and you have just started your first job out of college. You decide that you will put $10,000 into a retirement account every year on your birthday until you retire. The first $10,000 deposit will happen on your 23rd birthday (in one year from today) and your last deposit will be on your 65th You plan to retire on your 65th birthday. If your investment earns an 8.5% annual return, how much will you have saved up when you retire?
Consider that you are 30 years old and have just changed to a new job. You have $91,000 in the retirement olan from your former employer. You can roll that money into the retirement plan of the new employer. You vill also contribute $400 each month into your new employer's plan. If the rolled-over money and the new contributions both earn a 7 percent annual return, how much should you expect to have when you retire in 38 years? O $2,019,095.26 O $2,195,145.40 $2,298,025.12 $2,301,116.92
When you begin your new job, your employer says they will match any 401k deposits you make by 50% up to 5% of your overall salary annually. When you start your new job as a college grad, you will make $57600 per year and you decide to take full advantage of the matching by depositing 5% of your monthly salary every month. a) How much will YOU be depositing in the 401k each month from your salary? $ b) How much will YOUR EMPLOYER be depositingin the 401k each month? $ c) How much TOTAL will be deposited into your 401k each month? d) How much will you have in the account in 45 years if it pays 7.8% APR? $ e) How much total money will you put into the account after 45 years? f) How much total will the employer have put into the account after 45 years? $ g) How much total interest will you earn? $ h) If you choose NOT to take advantage of depositing money into the 401k because you feel you need that money to pay bills now, how much money will you be losing from your employer and interest…
7. You graduate from the Trobe University on your 25th birthday and you immediately find a job with a starting salary of $80,000 per year. You decide to put away 10% of your annual salary for your retirement, via endofyear deposits. Assume for this question that your salary never changes. If you retire on your 65th birthday (making your first deposit on your 26th birthday and your last deposit on your 65th birthday) and the interest rate is 7% p.a how much will you have saved when you retire?
Assume you are now 21 years old and will start working as soon as you graduate from college. You plan to start saving for your retirement on your 25th birthday and retire on your 65th birthday. After retirement, you expect to live at least until you are 85. You wish to be able to withdraw $38,000 (in today's dollars) every year from the time of your retirement until you are 85 years old (i.e., for 20 years). The average inflation rate is likely to be 5 percent. Problem 6.42(a) X Your answer is incorrect. Calculate the lump sum you need to have accumulated at age 65 to be able to draw the desired income. Assume that the annual return on your investments is likely to be 10 percent. (Round answer to 2 decimal places, e.g. 15.25. Round intermediate value to 3 decimal places, e.g. 359400.312. Do not round factor values.) Lump sum amount accumulated at age 65 $ 10463.384
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A) Suppose a recent college graduate's first job allows her to deposit $200 at the end of each month in a savings plan that earns 12%, compounded monthly. This savings plan continues for 8 years before new obligations make it impossible to continue. How much money has accrued in the account at the end of the 8 years? (Round your answer to the nearest cent.) $ B) 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 23 years after the plan began? (Round your answer to the nearest cent.) $
Suppose, again, that you want to retire at age 65 and to cover 25 years of regular, annual, $60,000 expenses, beginning on your 66th birthday, given 7% rates of return on your savings. a) What would be the present value of this amount on your 24th birthday? B) If you wanted to put an equal amount into your retirement account each year, beginning on your 25th birthday, and ending with the final payment on your 65th birthday, how much would you need to set aside each year?
You are preparing for your retirement and have decided to begin saving early. Based on your research, you've determined that you will require $3,000 per month to cover your living expenses during retirement. a. How much money do you need when you retire if you place all of it in a compound interest account that earns 7% compounded monthly, and is living off the interest only? (What is the required retirement savings amount that can generate your monthly living expenses as interest income?)

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