Amy Parker, a 22-year-old and newly hired marine biologist, has opened a 401(k) retirement plan with her employer. Amy's contribution, plus that of her employer, amounts to $2,400 per year starting at age 23. Amy expects this amount to increase by 4% each year until she retires at the age of 57 (there will be 35 EOY payments). What is the compounded future value of Amy's 401(k) plan, in millions of $, if it earns an annual interest rate of 7% per year? ... (a) The compounded future value of Amy's 401(k) plan is $ million. (Round to three decimal places.) (b) What will be the compounded future value if the plan earns an annual interest rate of 4% per year (instead of 7% per year)? $ million. (Round to three decimal places.)

Amy Parker, a 22-year-old and newly hired marine biologist, has opened a 401(k) retirement plan with her employer. Amy's contribution, plus that of her employer, amounts to $2,400 per year starting at age 23. Amy expects this amount to increase by 4% each year until she retires at the age of 57 (there will be 35 EOY payments). What is the compounded future value of Amy's 401(k) plan, in millions of $, if it earns an annual interest rate of 7% per year? ... (a) The compounded future value of Amy's 401(k) plan is $ million. (Round to three decimal places.) (b) What will be the compounded future value if the plan earns an annual interest rate of 4% per year (instead of 7% per year)? $ million. (Round to three decimal places.)

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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Your friend has just celebrated her 30th birthday and accepted her first job. She must now decide how much money to put into her retirement plan. Assume that every dollar in the plan is expected to earn a return of 8% p.a. and that your friend cannot make any withdrawals until she retires on her 65th birthday. After that point, she can make withdrawals as she wishes. She plans to live to 100 years and she plans to work until she turns 65. She estimates that to live comfortably in retirement, she will need $120,000 every year starting at the end of the first year of retirement and ending on her 100th birthday. Assume that she starts the contribution to her retirement plan on her 31st birthday and that she will contribute the same amount to the plan at the end of every year that she works. The amount of money she would need to contribute every year to fund her retirement is closest to: a. $7,475. b. $8,116. c. $8,207. d. $8,817.
Denise has $180,983 saved for her upcoming retirement and will make no further contributions. She wants to allow these funds to accumulate additional interest until her savings are sufficient to allow her to purchase an annuity that will pay $5,000 at the start of every quarter for 20 years. If her funds earn 5% compounded semiannually during both the period of deferral and the annuity period, how long will it be before Denise’s first $5,000 payment can be received?
Bobbi Proctor does not want to“gamble”on Social Security taking care of her inretirement. Hence she wants to begin to plan now for retirement. She has enlisted the services of Hackney Financial Planning to assist her in meeting her goals. Proctor has determined that she would like to have a retirement annuity of$200,000 per year, with the first payment to be received 36 years from now at theend of her first year of retirement. She plans a long, enjoyable retirement of about 25 years. Proctor wishes to save $5,000 at the end of each of the next 15 years, and an unknown, equal end-of-period amount for the remaining 20 years before she begins her retirement. Hackney has advised Proctor that she can safely assume that all savings will earn 12 percent per annum until she retires, but only 8 percent thereafter. How much must Proctor save per year during the 20 years preceding retirement?
A 40-year-old woman decides to put funds into a retirement plan. She can save $1,000 a year and earn 7 percent on this savings. How much will she have accumulated if she retires at age 65? Use Appendix C to answer the question. Round your answer to the nearest dollar.$ At retirement how much can she withdraw each year for 20 years from the accumulated savings if the savings continue to earn 7 percent? Use Appendix D to answer the question. Round your answer to the nearest dollar.$
(Saving for retirement—future value of an annuity) Selma and Patty Bouvier are twins and both work at the Springfield DMV. Selma and Patty Bouvier decide to save for retirement, which is 35 years away. They'll both receive an annual return of 8 percent on their investment over the next 35 years. Selma invests $1,800 per year at the end of each year only for the first 10 years of the 35-year period—for a total of $18,000 saved. Patty doesn't start saving for 10 years and then saves $1,800 per year at the end of each year for the remaining 25 years—for a total of $45,000 saved. How much will each of them have when they retire? Question content area bottom Part 1 a. How much will Selma have when she retires? $enter your response here (Round to the nearest cent.) Part 2 b. How much will Patty have when she retires?
Six years ago, Gladys opened a retirement account with an initial deposit of $14,000. Each year since then, she has added $2,000 to the account at the end of each year. She plans on contributing for the next 25 years. How would you determine the future value of her account at retirement? O Future value of a lump sum and future value of an annuity. O Future value of an annuity and the present value of a lump sum. O Future value of a lump sum and present value of an annuity. O Future value of an annuity.
Carla Lopez deposits $5, 200 a year into her retirement account. If these funds have an average eaning of 6 percent over the 40 years until her retirement, what will be the value of her retirement account?
Sharon has worked for a company with a retirement program, and today is retiring from her job with the amount of $157000 in her retirement account. She decides to withdrawal an equal amount from this account, once a year, beginning immediately, and ending 25 years from today (for a total of 26 payments). If the interest rate is 6.75%, solve for the annuity amount such that she uses up her full accumulation. $ Place your answer in dollars and cents. Do not use a dollar sign or comma as part of your answer. For example, an answer of fifty four point three eight would be placed as 54.38.
You annually invest $2,000 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 15 years. Your twin sister does the same starting at age 35 and makes the contributions for 25 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar.Amount on your account: $ Amount on your sister's account: $ Who has the larger amount at age 60?-Select-You haveYour sister hasItem 3 the larger amount.
A couple just got married and they are both 25 years of age. They each plan to retire in 40 years at the age of 65. They want to be able to receive $200,000 at the end of each year for 20 years, upon retirement. Currently they have a total of $2,000 in cash savings. In addition they expect to receive a total of $100,000 as a retirement bonus at the end of 40 years from their employer. How much must they save at the end of each year for the next 40 years so as to have enough money to achieve their retirement goal? Assume the interest rate is 8% and will remain the same.Using all the answers to the previous questions, what is the present value today of the amount that they need to save up to reach their retirement objective?
(Saving for retirement-future value of an annuity) Selma and Patty Bouvier are twins and both work at the Springfield DMV Selma and Patty Bouvier decide to save for retirement, which is 35 years away. They'll both receive an annual return of 11 percent on their investment over the next 35 years. Selma invests $2,000 per year at the end of each year only for the first 10 years of the 35-year period for a total of $20,000 saved. Patty doesn't start saving for 10 years and then saves $2,000 per year at the end of each year for the remaining 25 years-for a total of $50,000 saved. How much will each of them have when they retire? a. How much will Selma have when she retires? (Round to the nearest cent.).
Karen Kushida is 25 years old, and intends to retire at age 65. According to the estimation of life expectancy for Canadian women, she expects to live for 20 years in retirement. Therefore, Karen needs to save sufficient funds in the next 40 years to provide for herself for the subsequent 20 years. She plans to make monthly contributions to an equity-based mutual fund earning 10.5% annually. At retirement, Karen will put her savings into guaranteed investment eertificates (GIC's), paying 5.5%. Taking Canada Pension Plan income as well as inflation into account, Karen estimates that she will need a monthly income of $4000 throughout retirement. How much must she invest cach month in mutual fund to ensure this standard of living? Assume that there is monthly compounding for the mutual fund.

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