Challenge question. In the chapter text, we dealt exclusively with a single lump sum, but often we may be looking at several lump-sum values simultaneously. Let's consider the retirement plan of a couple. Currently, the couple has four different investments: a 401(k) plan, two pension plans, and a personal portfolio. The couple is 9 years away from retirement. They believe they have sufficient money in their plans today so that they do not have to contribute to the plans over the next 9 years and will still meet their $2 million retirement goal. Here are the current values and growth rates of their plans: 401(k): $89,000 growing at 7%. Pension Plan One: $342,000 growing at 8%. Pension Plan Two: $192,000 growing at 7.75%. Personal Portfolio: $155,000 growing at 8.75%. Does the couple have enough already invested to make their goal in 9 years? Hint: View each payment as a separate problem, and find the future value of each lump sum 9 years from now. Then add up all the future values. What is the value of the 401(k) 9 years from now? $ (Round to nearest cent.) ...

Challenge question. In the chapter text, we dealt exclusively with a single lump sum, but often we may be looking at several lump-sum values simultaneously. Let's consider the retirement plan of a couple. Currently, the couple has four different investments: a 401(k) plan, two pension plans, and a personal portfolio. The couple is 9 years away from retirement. They believe they have sufficient money in their plans today so that they do not have to contribute to the plans over the next 9 years and will still meet their $2 million retirement goal. Here are the current values and growth rates of their plans: 401(k): $89,000 growing at 7%. Pension Plan One: $342,000 growing at 8%. Pension Plan Two: $192,000 growing at 7.75%. Personal Portfolio: $155,000 growing at 8.75%. Does the couple have enough already invested to make their goal in 9 years? Hint: View each payment as a separate problem, and find the future value of each lump sum 9 years from now. Then add up all the future values. What is the value of the 401(k) 9 years from now? $ (Round to nearest cent.) ...

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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John is saving for retirement at age 65. Use the fowlloing information to answer a). And b).
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