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 $50,000 (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) * 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.)

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 $50,000 (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) * 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.)

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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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?
You are meeting with a financial planner to begin saving for retirement. Your starting salary is $65,000 in year one and you expect to receive pay increases at a rate of 3% each year for the first 30 years of your career, then maintain your salary until you retire. Your financial planner advised you to invest 10% of your yearly salary into a retirement account to maintain a similar lifestyle in retirement. You expect to work for the next 40 years. How much will you have in the account when you retire if your retirement account produces an average return of 9% per year?
You plan on retiring in 30 years. You currently have $200,000 and think you will need $1,000,000 to retire. Assuming that you don't deposit any additional money into the account, what annual return will you need to earn to meet this goal?
Your parents will retire in 26 years. They currently have $230,000 saved, and they think they will need $1,250,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
Please help me. I dont understand the steps.
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
You are 35 years old and work with an institution where the retirement age is 65 years. For your retirement planning, you wish that from age 66 through 85, you should receive an annual sum of $50,000 at the end of each year. For this purpose, you will invest the required amount of money at retirement age. How much should you save at the end of each year from year 36 through 65 such that you have the amount of money, which if invested at your retirement age, will result in you receiving a sum of $50,000 each year from age 66 through 85? Assume an average interest rate of 6% throughout. Hint: Work the problem backwards. First solve the part from age 66 through 85. Then solve the part from age 36 to 65.
You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. You expect to retire in 15 years. If your account earns 10% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?
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?)
You are graduating from college at the end of this semester and after reading the The Business of Life box in this chapter, you have decided to invest $4300 at the end of each year into a Roth IRA for the next 41 years. If you earn 8 percent compounded annually on your investment, how much will you have when you retire in 41 years? How much will you have if you wait 10 years before beginning to save and only make payments into your retirement account?
Suppose that you start working for a company at age 25. You are offered two rather unlikely, but quite enticing, retirement plans from which you are allowed to choose one. [Round all answers to the nearest dollar.] Retirement plan 1: When you retire, you will receive $16,000 for each year of service. Retirement plan 2: When you start work, the company deposits $2500 into a savings account that is guaranteed to pay a yearly rate of 16%. When you retire, the account will be closed and the balance given to you. A. Determine the amount you would receive under plan 1, if you retired at age 55. $ B. Determine the amount you would receive under plan 1, if you retired at age 65. C. Determine the amount you would receive under plan 2, if you retired at age 55. D. Determine the amount you would receive under plan 2, if you retired at age 65.
Vijaya

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