Bankrate.com reported on a shocking statistic: only 54% of workers participate in their company's retirement plan. This means that 46% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during retirement. Jill Collins, 20, decided she needs to have $170,000 in her retirement account upon retiring at 60. How much does she need to invest each year at 5% compounded annually to meet her goal? (Please use the following provided Table) Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount. Each year investment
Bankrate.com reported on a shocking statistic: only 54% of workers participate in their company's retirement plan. This means that 46% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during retirement. Jill Collins, 20, decided she needs to have $170,000 in her retirement account upon retiring at 60. How much does she need to invest each year at 5% compounded annually to meet her goal? (Please use the following provided Table) Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount. Each year investment
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
Related questions
Question
Transcribed Image Text:Sinking fund factor of $1 per period at i% for n periods.
1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
0.4975 0.4963 0.4950 0.4938 0.4926 0.4914
0.3300 0.3284 0.3268 0.3251 0.3235 0.3219
0.2463 0.2444 0.2426 0.2408 0.2390 0.2373
0.1960 0.1941 0.1922 0.1902 0.1884 0.1865
0.1625 0.1605 0.1585 0.1565 0.1546 0.1527
0.1386 0.1366 0.1345 0.1325 0.1305 0.1285
0.1207 0.1186 0.1165 0.1145 0.1125 0.1105
0.1067 0.1046 0.1025 0.1005 0.0984 0.0964
0.0956 0.0934 0.0913 0.0893 0.0872 0.0852
0.0865 0.0843 0.0822 0.0801 0.0781 0.0761
0.0788 0.0767 0.0746 0.0725 0.0705 0.0685
0.0724 0.0702 0.0681 0.0660 0.0640 0.0621
0.0669 0.0647 0.0626 0.0605 0.0585 0.0566
0.0621 0.0599 0.0578 0.0558 0.0538 0.0518
0.0579 0.0558 0.0537 0.0516 0.0496 0.0477
0.0543 0.0521 0.0500 0.0479 0.0460 0.0440
0.0510 0.0488 0.0467 0.0447 0.0427 0.0408
0.0481 0.0459 0.0438 0.0418 0.0398 0.0379
0.0454 0.0432 0.0412 0.0391 0.0372 0.0354
0.0430 0.0409 0.0388 0.0368 0.0349 0.0330
0.0409 0.0387 0.0366 0.0346 0.0327 0.0309
0.0389 0.0367 0.0347 0.0327 0.0308 0.0290
0.0371 0.0349 0.0329 0.0309 0.0290 0.0273
0.0354 0.0333 0.0312 0.0293 0.0274 0.0257
0.0339 0.0317 0.0297 0.0278 0.0259 0.0242
0.0324 0.0303 0.0283 0.0264 0.0246 0.0229
0.0311 0.0290 0.0270 0.0251 0.0233 0.0216
0.0299 0.0278
0.0239 0.0221 0.0204
0.0287 0.0266
0.0210 0.0194
0.0277 0.0256 0.0236 0.0217 0.0200 0.0184
0.0267 0.0246 0.0226 0.0208 0.0190 0.0174
0.0257 0.0236 0.0217 0.0199 0.0182 0.0166
0.0248 0.0228 0.0208 0.0190 0.0173 0.0158
0.0240 0.0219 0.0200 0.0182 0.0165 0.0150
0.0232 0.0212 0.0192 0.0175 0.0158 0.0143
0.0225 0.0204 0.0185 0.0167 0.0151 0.0136
0.0218 0.0197 0.0178 0.0161 0.0145 0.0130
0.0211 0.0191 0.0172 0.0154 0.0138 0.0124
0.0258
0.0246
0.0228
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
322258885E
24
26
27
29
30
31
33
34
35
36
37
38
39
0.5%
1.0000
0.4988
0.3317
0.2481
0.1980
0.1646
0.1407
0.1228
0.1089
0.0978
0.0887
0.0811
0.0746
0.0691
0.0644
0.0602
0.0565
0.0532
0.0503
0.0477
0.0453
0.0431
0.0411
0.0393
0.0377
0.0361
0.0347
0.0334
0.0321
0.0310
0.0299
0.0289
0.0279
0.027 1
0.0262
0.0254
0.0247
0.0240
0.0233
4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0%
1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
0.4902 0.4890 0.4878 0.4866 0.4854 0.4843 0.4831 0.4819 0.4808 0.4796 0.4785
0.3203 0.3188 0.3172 0.3157 0.3141 0.3126 0.3111 0.3095 0.3080 0.3065 0.3051
0.2355 0.2337 0.2320 0.2303 0.2286 0.2269 0.2252 0.2236 0.2219 0.2203 0.2187
0.1846 0.1828 0.1810 0.1792 0.1774 0.1756 0.1739 0.1722 0.1705 0.1688 0.1671
0.1508 0.1489 0.1470 0.1452 0.1434 0.1416 0.1398 0.1380 0.1363 0.1346 0.1329
0.1266 0.1247 0.1228 0.1210 0.1191 0.1173 0.1156 0.1138 0.1121 0.1104 0.1087
0.1085 0.1066 0.1047 0.1029 0.1010 0.0992 0.0975 0.0957 0.0940 0.0923 0.0907
0.0945 0.0926 0.0907 0.0888 0.0870 0.0852 0.0835 0.0818 0.0801 0.0784 0.0768
0.0833 0.0814 0.0795 0.0777 0.0759 0.0741 0.0724 0.0707 0.0690 0.0674 0.0658
0.0741 0.0722 0.0704 0.0686 0.0668 0.0651 0.0634 0.0617 0.0601 0.0585 0.0569
0.0666 0.0647 0.0628 0.0610 0.0593 0.0576 0.0559 0.0543 0.0527 0.0512 0.0497
0.0601 0.0583 0.0565 0.0547 0.0530 0.0513 0.0497 0.0481 0.0465 0.0450 0.0436
0.0547 0.0528 0.0510 0.0493 0.0476 0.0459 0.0443 0.0428 0.0413 0.0398 0.0384
0.0499 0.0481 0.0463 0.0446 0.0430 0.0414 0.0398 0.0383 0.0368 0.0354 0.0341
0.0458 0.0440 0.0423 0.0406 0.0390 0.0374 0.0359 0.0344 0.0330 0.0316 0.0303
0.0422 0.0404 0.0387 0.0370 0.0354 0.0339 0.0324 0.0310 0.0296 0.0283 0.0270
0.0390 0.0372 0.0355 0.0339 0.0324 0.0309 0.0294 0.0280 0.0267 0.0254 0.0242
0.0361 0.0344 0.0327 0.0312 0.0296 0.0282 0.0268 0.0254 0.0241 0.0229 0.0217
0.0336 0.0319 0.0302 0.0287 0.0272 0.0258 0.0244 0.0231 0.0219 0.0207 0.0195
0.0313 0.0296 0.0280 0.0265 0.0250 0.0236 0.0223 0.0210 0.0198 0.0187 0.0176
0.0292 0.0275 0.0260 0.0245 0.0230 0.0217 0.0204 0.0192 0.0180 0.0169 0.0159
0.0273 0.0257 0.0241 0.0227 0.0213 0.0200 0.0187 0.0175 0.0164 0.0154 0.0144
0.0256 0.0240 0.0225 0.0210 0.0197 0.0184 0.0172 0.0161 0.0150 0.0140 0.0130
0.0240 0.0224 0.0210 0.0195 0.0182 0.0170 0.0158 0.0147 0.0137 0.0127 0.0118
0.0226 0.0210 0.0196 0.0182 0.0169 0.0157 0.0146 0.0135 0.0125 0.0116 0.0107
0.0212 0.0197 0.0183 0.0170 0.0157 0.0145 0.0134 0.0124 0.0114 0.0106 0.0097
0.0200 0.0185 0.0171 0.0158 0.0146 0.0135 0.0124 0.0114 0.0105 0.0096 0.0089
0.0189 0.0174 0.0160 0.0148 0.0136 0.0125 0.0114 0.0105 0.0096 0.0088 0.0081
0.0178 0.0164 0.0151 0.0138 0.0126 0.0116 0.0106 0.0097 0.0088 0.0081 0.0073
0.0169 0.0154 0.0141 0.0129 0.0118 0.0108 0.0098 0.0089 0.0081 0.0074 0.0067
0.0159 0.0146 0.0133 0.0121 0.0110 0.0100 0.0091 0.0082 0.0075 0.0067 0.0061
0.0151 0.0137 0.0125 0.0113 0.0103 0.0093 0.0084 0.0076 0.0069 0.0062 0.0056
0.0143 0.0130 0.0118 0.0106 0.0096 0.0087 0.0078 0.0070 0.0063 0.0057 0.0051
0.0136 0.0123 0.0111 0.0100 0.0090 0.0081 0.0072 0.0065 0.0058 0.0052 0.0046
0.0129 0.0116 0.0104 0.0094 0.0084 0.0075 0.0067 0.0060 0.0053 0.0048 0.0042
0.0122 0.0110 0.0098 0.0088 0.0079 0.0070 0.0062 0.0055 0.0049 0.0044 0.0039
0.0116 0.0104 0.0093 0.0083 0.0074 0.0065 0.0058 0.0051 0.0045 0.0040 0.0035
0.0111 0.0099 0.0088 0.0078 0.0069 0.0061 0.0054 0.0048 0.0042 0.0037 0.0032
9.5% 10.0%
1.0000 1.0000
0.4773 0.4762
0.3036 0.3021
0.2171 0.2155
0.1654 0.1638
0.1313 0.1296
0.1070 0.1054
0.0890 0.0874
0.0752 0.0736
0.0643 0.0627
0.0554 0.0540
0.0482 0.0468
0.0422 0.0408
0.0371 0.0357
0.0327 0.0315
0.0290 0.0278
0.0258 0.0247
0.0230 0.0219
0.0206 0.0195
0.0185 0.0175
0.0166 0.0156
0.0149 0.0140
0.0134 0.0126
0.0121 0.0113
0.0110 0.0102
0.0099 0.0092
0.0090 0.0083
0.0081 0.0075
0.0074 0.0067
0.0067 0.0061
0.0061 0.0055
0.0055 0.0050
0.0050 0.0045
0.0045 0.0041
0.0041 0.0037
0.0038 0.0033
0.0034 0.0030
0.0031 0.0027
0.0028 0.0025
Transcribed Image Text:Bankrate.com reported on a shocking statistic: only 54% of workers participate in their company's retirement plan. This means that
46% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during
retirement. Jill Collins, 20, decided she needs to have $170,000 in her retirement account upon retiring at 60. How much does she
need to invest each year at 5% compounded annually to meet her goal? (Please use the following provided Table:)
Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount.
Each year investment
Expert Solution
Step 1
A target accumulated value in future can be achieved by a disciplined deposit in the form of annuity over a period of time. In one such case, we have to find the quantum of deposit that will help achieve the target future value at the time of retirement.
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