When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $550 at the end of eachquarter into an account paying 7.1% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same interest rate, but make nofurther deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $550 at the end of each quarter in an account paying 7.1% interest,compounded quarterly for 35 years. Complete parts (a) through (e) below...a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the followingquestions. Choose the correct answer below.O A. Joe will have more in his account after 45 years. Sarah contributed more money overall, but Joe was earning 7.1% interest per quarter for 35 years.O B. Both Joe and Sarah will have the same amount of money in their accounts because they were both earning 7.1% interest on their money for 35 years.O c. Sarah will have more in her account after 45 years. Joe earned interest for 10 more years than Sarah, but Sarah contributed monthly payments for a lot longer thanJoe.O D. Sarah will have more in her account after 45 years. Sarah contributed more overall, so she will have more money in her account.b. How much will Joe contribute to his retirement account?(Round to the nearest dollar.)c. How much will be in Joe's account after 45 years?$ (Do not round until the final answer. Then round to the nearest dollar.)d. How much will Sarah contribute to her retirement account?$(Round to the nearest dollar.)e. How much will be in Sarah's account after 45 years?$(Do not round until the final answer. Then round to the nearest dollar.)

Correct option is A Joe will have more balance as he started investing earlier and has gained…

Answered: a. Without doing any calculations,…

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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Mick plans to start saving money for retirement. By taking 10% of monthly gross income. Mick is able to contribute $572 each money to a retirement plan. The account is expected to earn interest with an APR of 5.25% compounded monthly. Round to answers to two decimal cases places. a.How much money will be in Mick retirement account if he continues to make the same monthly investment for 40 years? b.Overall Mick contributed how much of her own money into the retirement account? c. What percent of the final balance in Mick retirement account was interest?
Hi, How do I solve for the 2 annuities in this question? Thanks
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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9
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