Bobby Whitaker wants to save money to meet three objectives. First, he would like to be able to retire 30 years from nowwith retirement income of $10,000 per month for 25 years, with the first payment received 30 years and 1 month fromnow. Second, he would like to purchase a cabin in Rapid City in 10 years at an estimated cost of $380,000. Third, afterhe passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1.2 million to hisnephew Paulie. He can afford to save $2,200 per month for the next 10 years. If he can earn an EAR of 10 percentbefore he retires and an EAR of 7 percent after he retires, how much will he have to save each month in Years 11through 30? [Hint: Making a timeline is always a useful first step.]

Bobby Whitaker wants to save money to meet three objectives. First, he would like to be able to retire 30 years from with retirement income of $10,000 per month for 25 years, with the first payment received 30 years and 1 month fr now. Second, he would like to purchase a cabin in Rapid City in 10 years at an estimated cost of $380,000. Third, a he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1.2 million to his nephew Paulie. He can afford to save $2,200 per month for the next 10 years. If he can earn an EAR of 10 percent before he retires and an EAR of 7 percent after he retires, how much will he have to save each month in Years 11

Bobby Whitaker wants to save money to meet three objectives. First, he would like to be able to retire 30 years from with retirement income of $10,000 per month for 25 years, with the first payment received 30 years and 1 month fr now. Second, he would like to purchase a cabin in Rapid City in 10 years at an estimated cost of $380,000. Third, a he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1.2 million to his nephew Paulie. He can afford to save $2,200 per month for the next 10 years. If he can earn an EAR of 10 percent before he retires and an EAR of 7 percent after he retires, how much will he have to save each month in Years 11

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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bed What's the interest rate of a 5-year, annual $5,400 annuity with present value of $22,000? (Use a time value of money calculator or a spreadsheet. Round your answer to 2 decimal places.) Annuity interest rate %
A woman is planning for retirement in 30 years and decides she can deposit $6,000 each year on December 31 into a retirement savings plan that she expects will pay 6% interest. In 20 years she also expects to receive a small inheritance of $12,000 that she can also put into her retirement fund. The woman anticipates that her retirement fund will need to last 20 years; she estimates that she will need $60,000 at the end of each year in retirement to cover her living expenses. Her plan is flawed. How much extra does she need to save every year (rounded to dollars and cents) to achieve her goals? (Do not round interim calculations)
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $16,000 per month for 25 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $375,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1.5 million to his nephew Frodo. He can afford to save $2,150 per month for the next 10 years. If he can earn an EAR of 10 percent before he retires and an EAR of 7 percent after he retires, how much will he have to save each month in Years 11 through 30? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $24,000 per month for 25 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 15 years at an estimated cost of $542,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $850,000 to his nephew Frodo. He can afford to save $1,700 per month for the next 15 years. Required: If he can earn a 10 percent EAR before he retires and a 9 percent EAR after he retires, how much will he have to save each month in years 16 through 30?
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $30,000 per month for 25 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 20 years at an estimated cost of $1,239,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $550,000 to his nephew Frodo. He can afford to save $1,700 per month for the next 20 years. If he can earn a 12 percent EAR before he retires and a 8 percent EAR after he retires, how much will he have to save each month in Years 21 through 30?
Suzy wants to retire in 30 years. She expects to live 25 years after retirement. She prepares a savings plan to meet the objectives: First, after retirement she would like to be able to withdraw $20,000 per month. The first withdrawal will occur at the end of the first month after retirement. Second, she would like to leave her daughter a $500,000 inheritance. Lastly, she wants to set up a fund that will pay $5000 per month forever to her favorite charity after she dies. These payments will begin one month after she dies. All the monies earn 10% annual rate compounded monthly. How much will she have to save per month to meet these objectives? She wishes to make her first deposit from now and the last deposit on the day she retires.
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Ed wants to start saving for retirement by investing in his 401(k). Over the next 30 years, he wants to save up a total of $1,000,000. He will make contributions from his monthly paychecks (his annual salary is $144,000) and his employer will match 25% of his contributions. What percent of each monthly paycheck does he need to contribute to his 401(k) to meet his goal, if his account earn 8% interest? O 3.47% O 3.12% 4.86% O 4.47%
Gail decided that in six years she would leave her job in publishing and retire to Arizona. What amount should Gail invest today, so that she will be able to withdraw $50,000 at the end of each year for 30 years after she retires? Assume she can invest money at 5%, compounded annually.
Mr. Mangano is considering taking early retirement, having saved $400,000. Mr. Mangano wishes to determine how many years the saving will last if he withdraws $60,000 per year at the end of each year. Mr.Mangano's savings can earn 10 percent per year. 11.67 years. 11.35 years 10.90 years 11.53 years. 12.01 years
You are planning for your retirement. You expect to earn a monthly salary of $7,000 starting on the 1st month after you retire, which will be able to provide comfortably for your daily expenses through your retirement years. You are currently 33 and plan on retiring when you become 64, and you expect to live 20 years after retirement. In addition to providing a salary for your retirement you would like to buy a house by the time you reach 55. The house you dream of would cost you $1,650,000. Now you have a down payment of $50,000 (ignore closing costs). In addition you would like to offer yourself a retirement gift, a Mercedes that you would buy brand new to serve you through your retirement years. The car is expected to cost you $76,000. It will be purchased when you reach 64 years of age. Assume you can earn 12% compounded monthly from now until you retire, and the rate will change to 6% monthly compounding after that.How much should you save per month to be able to buy the house at…

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