An engineer graduates at age 22, and she gets a job that pays $65,000 per year. She wants to invest enough to fund her own retirement without relying on an employer pension program or Social Security. Her goal is to have $1.5 million saved for retirement at age 67. She is relatively confident that her investments will earn an average interest rate of at least 4% per year. (a) Assume that she makes equal annual deposits starting on her 23rd birthday and continuing through her 67th birthday. How much must she invest each year to meet her goal? (6) Suppose she invests the same amount from part (a) every year starting on her 33ª birthday. How much money will she have in the account on her 67th birthday under this scenario? Contributed by Gillian Nicholls, Southeast Missouri State University

An engineer graduates at age 22, and she gets a job that pays $65,000 per year. She wants to invest enough to fund her own retirement without relying on an employer pension program or Social Security. Her goal is to have $1.5 million saved for retirement at age 67. She is relatively confident that her investments will earn an average interest rate of at least 4% per year. (a) Assume that she makes equal annual deposits starting on her 23rd birthday and continuing through her 67th birthday. How much must she invest each year to meet her goal? (6) Suppose she invests the same amount from part (a) every year starting on her 33ª birthday. How much money will she have in the account on her 67th birthday under this scenario? Contributed by Gillian Nicholls, Southeast Missouri State University

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: What rate of interest compounded annually would result in receipt of $28,530 in eight years from an…

Q: 12) For the cash flows shown below, determine the value of x that will make the future worth in…

A: Formula for the future value is given as: F = P(1+R)t F: future value P : present valueR : rate of…

Q: a perpetuity has a price of $750 and an annual interest payment of $35,

Q: An oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650…

A: Given that, Revenue from oil is $2000000 per year Revenue from natural gas is $560000 per year…

Q: Assume you graduate from college with $26000 in student loans. If your interest rate is fixed at…

A: Compounding refers to the process of getting interest on the principal amount as well as the…

Q: Suppose the interest rate is 6.9% APR with monthly compounding. What is the present value of an…

A: The nominal interest rate is 6.9% per year compounded monthly. There is a uniform annuity of $105…

Q: John plans to make 10 equal annual deposits starting one year from now into a fund that pays an…

A: Let the John annual deposit starting one year from now is A i =10% The cashflow diagram is shown…

Q: You are eligible for a 30 year fixed-rate home mortgage with an interest rate of 3.6% per year. If…

A: Present value is the concept that states that an amount of money invested today is worth more than…

Q: Nick, age 30, is starting his savings plan this year by putting away $2,900.00 at the end of every…

A: From the problem, we can identify the following variables:rate: The interest rate per period is 6%…

Q: Fill in the table below when P= $9,000, S= $2,000 (at the end of four years), and i= 17% per year.…

A: Refund is a term that has several meanings related to the business world. Basically, the initial…

Q: You deposit $1,200 in an account each year for 5 years, starting at the end of Year 1. At the end of…

A: Present value is the value of investment in today's dollar.Future value is the value of investment…

Q: Suppose you were given a one time gift of $10,000 to put into a savings account. The account earns…

A: Compound interest is the rate of interest that is used to calculate the value added to a loan or a…

Q: For an APR of 10% per year, if the interest is compounded weekly, determine the nominal rate per (a)…

A: A nominal annual percentage rate is calculated through a simple rate of interest on a yearly basis,…

Q: A bond with a face value of $10,000 pays interest of 6% per year. This bond will be redeemed at its…

A: Bond valuation is a method for figuring out an individual bond's hypothetical fair value. Bond…

Q: Suppose that the parents of a young child decide to make annual deposits into a savings account,…

A: A future payment's present value is its current cash amount. An annuity is a series of annual…

Q: QUESTION 1 An interest rate of 38% per year, compounded monthly, is nearest to * per year Enter the…

A: DISCLAIMER :- As you posted multiple questions we are supposed to solve the first one only as per…

Q: Consider an EOY geometric gradient, which lasts for eight years, whose initial value at EOY one is…

A: It can be defined as a form of cash flow in which the series of the cash by a constant amount at the…

Q: Use the continuous compound interest formula to find the indicated value A = $7,400; r = 9.77%; t=…

A: Given: A = 7400 r = 9.77% = 0.0977 t = 11

Q: Determine the amount of money that must be invested now (time 0) at 8% nominal interest, compounded…

A: Investment in economics refers to the expenditure on capital goods or assets with the expectation of…

Q: 3) Ahmad plans to make the deposits and withdrawals amounts shown in the cash shown below, find how…

A: To find the amount in account at the end of year 10, we need to calculate the future value of each…

Q: This credit account carries a temporary low introductory rate (teaser rate) of| %. This teaser APR…

A: Solution of the given question is: The introductory rate is 3.99% This rate applies within the…

Q: For an APR of 11.00% per year, if the interest is compounded weekly determine the nominal rate per…

A: The Annual Percentage Rate (APR) is the annual rate charged for borrowing or earned through an…

Question

An engineer graduates at age 22, and she gets a job that pays $65,000 per year. She wants to invest
enough to fund her own retirement without relying on an employer pension program or Social Security.
Her goal is to have $1.5 million saved for retirement at age 67. She is relatively confident that her
investments will earn an average interest rate of at least 4% per year.
(a) Assume that she makes equal annual deposits starting on her 23rd birthday and continuing through
her 67" birthday. How much must she invest each year to meet her goal?
(6) Suppose she invests the same amount from part (a) every year starting on her 33d birthday. How
much money will she have in the account on her 67th birthday under this scenario?
Contributed by Gillian Nicholls, Southeast Missouri State University

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A large electronic retailer is considering the purchase of software that will minimize shipping expenses in its supply chain network. This software, including installation and training, would be a $10-million investment for the retailer. If the firm’s effective interest rate is 15% per year and the life of the software is four years, what annual savings in shipping expenses must there be to justify the purchase of the software?
Suppose that a father, on the day his son is born, wishes to determine what lump amount would have to be paid into an account bearing interest of 17% per year to provide withdrawals of $4,000 on each of the son's 9th, 10th, 11th, and 12th birthdays. How much money does the father have to deposit on the day his son is born ? Please, represent the cash-flow diagram.
Joseph Ray just received an inheritance of $50,000 from his great aunt. He plans to invest the funds for retirement. If Joseph can earn 6% per year with quarterly compounding for 30 years, how much will he have accumulated? $271,550 $269,113 $284,622 $298,466
I want to know how calculate CR and please don't give handwritten answer.. Thanks
Which statement is true? a) An arithmetic gradient sits atop a present worth b) An arithmetic gradient increases or decreases by a constant percentage over time c) The Future worth of an annuity is one time period to the right of the last arrow d) All of the above e) None of the above