Assume that you have just turned 21, are graduating from college, and are planning for your retirement; at age 55. You currently have no money saved, but plan to make significant investments into a retirement account now that you have gotten a high-paying job. Because of moving and additional expenses associated with the start of your new job, you believe that you will only be able to invest $2,000 on your 22nd and 23rd birthdays (2 payments). You then expect to invest $10,000 each year on your 24th through your 30th birthdays (7 payments), $20,000 each year on your 31st through 40th birthdays (10 payments), and $30,000 each year on your 41st through 55th birthdays (15 payments). During this 34-year period you are willing to take some investment risks and you believe that your investment account can earn a nominal annual rate of return of 9 percent, compounded monthly. At age 55 you plan to retire and will use the money in your investment account to buy a 40-year, guaranteed annuity from an insurance company that will pay you a fixed amount on your 56th through 95th birthdays. Since this annuity is guaranteed, the insurance company uses a nominal annual rate of return of 6 percent, compounded quarterly. Given this information, determine the amount you can expect to receive each year after you retire. Enter your answer without symbols, to the nearest cent. For example, if your answer is $11,467.40, enter "11467.40". I
Assume that you have just turned 21, are graduating from college, and are planning for your retirement; at age 55. You currently have no money saved, but plan to make significant investments into a retirement account now that you have gotten a high-paying job. Because of moving and additional expenses associated with the start of your new job, you believe that you will only be able to invest $2,000 on your 22nd and 23rd birthdays (2 payments). You then expect to invest $10,000 each year on your 24th through your 30th birthdays (7 payments), $20,000 each year on your 31st through 40th birthdays (10 payments), and $30,000 each year on your 41st through 55th birthdays (15 payments). During this 34-year period you are willing to take some investment risks and you believe that your investment account can earn a nominal annual rate of return of 9 percent, compounded monthly. At age 55 you plan to retire and will use the money in your investment account to buy a 40-year, guaranteed annuity from an insurance company that will pay you a fixed amount on your 56th through 95th birthdays. Since this annuity is guaranteed, the insurance company uses a nominal annual rate of return of 6 percent, compounded quarterly. Given this information, determine the amount you can expect to receive each year after you retire. Enter your answer without symbols, to the nearest cent. For example, if your answer is $11,467.40, enter "11467.40". I
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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Transcribed Image Text:Assume that you have just turned 21, are graduating from college, and are planning for your
retirement; at age 55. You currently have no money saved, but plan to make significant
investments into a retirement account now that you have gotten a high-paying job. Because
of moving and additional expenses associated with the start of your new job, you believe that
you will only be able to invest $2,000 on your 22nd and 23rd birthdays (2 payments). You then
expect to invest $10,000 each year on your 24th through your 30th birthdays (7 payments),
$20,000 each year on your 31st through 40th birthdays (10 payments), and $30,000 each year
on your 41st through 55th birthdays (15 payments). During this 34-year period you are willing
to take some investment risks and you believe that your investment account can earn a
nominal annual rate of return of 9 percent, compounded monthly. At age 55 you plan to
retire and will use the money in your investment account to buy a 40-year, guaranteed
annuity from an insurance company that will pay you a fixed amount on your 56th through
95th birthdays. Since this annuity is guaranteed, the insurance company uses a nominal
annual rate of return of 6 percent, compounded quarterly. Given this information, determine
the amount you can expect to receive each year after you retire.
Enter your answer without symbols, to the nearest cent. For example, if your answer is
$11,467.40, enter "11467.40".
I
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