Chris Silvers is 39 years old and has accumulated $128,000 In his self-directed defined contributlon penslon plan. Each year he contributes $2,500 to the plan, and his employer contributes an equal amount. Chris thinks he willretire at age 62 and figures he will live to age 86. The plan allows for two types of Investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 11% and has a standard devlation of 37%. Chris nowhas 25% of his money In the risk-free Investment and 75% In the risky Investment. He plans to continue saving at the same rate and keep the same proportions Invested In each of the Investments. His salary will grow at the samerate as Inflation.Of the total amount of new funds that will be Invested by Chris and by his employer on his behalf, how much will Chris put Into the safe account each year; how much Into the risky account?Multiple Cholce$2.500: $2,500$3.200: $1.80o$3.000; $2,000o$1,250: $3.750$2400: $2,600 Paulina Lesky is 27 years old and has accumulated $7,500 In her self-directed defined contribution penslon plan. Each year she contributes $2,000 to the plan, and her employer contributes an equal amount. Paulina thinks she willretire at age 63 and figures she wll live to age 90. The plan allows for two types of Investments. One offers a 3% risk-free real rate of return. The other offers an expected return of 12% and has a standard devlation of 39%. PaulinaLesky Is 27 years old and has accumulated $7,500 In her self now has 20% of her money in the risk-free Investment and 80% In the risky Investment. She plans to continue saving at the same rate and keep the same proportionsInvested In each of the Investments. Her salary will grow at the same rate as Inflatlon.How much can Paulina be sure of having In the safe account at retirement?Multiple Choice$45,473$62.557$78.943$54,968$74,643

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Chris Silvers Is 39 years old and has accumulated $128,000 In his self-directed defined contribution penslon plan. Each year he contributes $2,500 to the plan, and his employer contributes an equal amount. Chris thinks he will retire at age 62 and figures he will live to age 86. The plan allows for two types of Investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 11% and has a standard deviation of 37%. Chris now has 25% of his money In the risk-free Investment and 75% In the risky Investment. He plans to continue saving at the same rate and keep the same proportions Invested in each of the Investments. His salary will grow at the same rate as Inflation. Of the total amount of new funds that wll be Invested by Chris and by his employer on his behalf, how much will Chris put Into the safe account each year, how much Into the risky account? Multiple Cholce $2.500: $2,50o $3.200: $1,800 $3.000: $2.000 $1,250: $3,750 $2.400: $2.600

Chris Silvers Is 39 years old and has accumulated $128,000 In his self-directed defined contribution penslon plan. Each year he contributes $2,500 to the plan, and his employer contributes an equal amount. Chris thinks he will retire at age 62 and figures he will live to age 86. The plan allows for two types of Investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 11% and has a standard deviation of 37%. Chris now has 25% of his money In the risk-free Investment and 75% In the risky Investment. He plans to continue saving at the same rate and keep the same proportions Invested in each of the Investments. His salary will grow at the same rate as Inflation. Of the total amount of new funds that wll be Invested by Chris and by his employer on his behalf, how much will Chris put Into the safe account each year, how much Into the risky account? Multiple Cholce $2.500: $2,50o $3.200: $1,800 $3.000: $2.000 $1,250: $3,750 $2.400: $2.600

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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Similar questions

Charlie Brown, a 25 year old professional, invests $200 a month in the XYZ Capital Opportunity Fund, which has a 10-year average return of 8.75%. a. Charlie wants to estimate what he will have for retirement when he is 60 years old if the rate stays constant. Assume monthly compounding. b. if Charlie makes no further deposits and makes no withdrawals after the age 60, how much will he have for retirement at age 65?
N. Ebriate, a college student at a party university, decides to forego beerdrinking and invest the $100 he saves at the end of each month in a mutualfund that is currently earning 11 percent annually. He has a job where heearns income and invests this money in a Roth IRA.a. How much will he have in his fund in 4 years on graduation?b. If he graduates at 22 and leaves this investment in the mutual fund withoutadding any additional funds, how much will he have at age 60?c. If he really enjoys his work and decides to leave the money in the fund untilage 75, how much will he have?d. If he never touches this mutual fund and dies at the age of 90, how muchwill he leave in his estate from only this investment?
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)
Stacey deposits $ 4500 at the end of each year for 30 years into an investment fund which pays out interests at annual effective interest rate of 3 %. He is only able to reinvest this interest at an annual effective interest rate of 2 %. What is the accumulated value of his investments at the time of the last investment. Explain your work.
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Problem 13-78 Part b (Static) b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the traditional IRA)?
Claire Fitch is planning to begin an individual retirement program in which she will invest $2.200 at the end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of 10%. What is the value of the program on the date of the last payment (30 years from the present)? (PV of $1. EV of $1, PVA of $1. and EVA of 5) (Use appropriate factor(s) from the tables provided. Round your "FV of an Ordinary Annuity" to 4 decimal places and final answer to the nearest whole dollar)
By the end of this year you would be 35 years old and you want to plan for your retirement. You wish to retire at the age of 65 and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened now your retirement account with 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate, throughout your retirement years. How much will the face value of the bond that you will be investing?Please calculate the monthly payment in your retirement account in order to be able to achieve the plan mentioned above? How much will your inheritors receive? Kindly solve all the questions and sub questions.
By the end of this year you would be 35 years old and you want to plan for your retirement. You wish to retire at the age of 65 and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened now your retirement account with 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate, throughout your retirement years. Suppose you think if you were to retire right now you would have needed $50,000 each year to supplement your social security and maintain your desired lifestyle. But because there is on average 3% annual inflation, when you retire in 30 years from now you need more than $50,000 per year to maintain the lifestyle you like. How much annual payment in the retirement account is needed to accumulate the amount needed to purchase the bond…
7. George, a financial planner, has determined that Dennis, his client, needs $2 million at age 66 to retire by using an annuity model based on a retirement income of $150,337.75 per year for 24 years to age 90. If the earnings rate was 10% and the inflation rate was 3%, what additional amount would be needed at age 66 to provide a capital preservation model solution?
Doris plans to save $5000 per year for the next 35 years. Her money will be deposited in a stock market index fund that has a 0.5% annual management fee. If this fund earns 6% per year, how much will Doris save by investing in this fund instead of an actively managed mutual fund that has a 1% annual fee? Compute your answer as a future amount at the end of year . Assume that payments are made at the end of year. The future equivalent of savings amount at the end of year 35 is ___.
Robin Hood is 23 years old and has accumulated $4,000 in her self-directed defined contribution pension plan. Each year she contributes $2,000 to the plan, and her employer contributes an equal amount. Robin thinks she will retire at age 67 and figures she will live to age 81. The plan allows for two types of investments. One offers a 3.5% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 23%. Robin now has 5% of her money in the risk-free investment and 95% in the risky investment. She plans to continue saving at the same rate and keep the same proportions invested in each of the investments. Her salary will grow at the same rate as inflation. What is the expected value of Robin's risky assets at retirement?
Joe's starting salary as a mechanical engineer is around $100,000. Joe is planning to place a total of 8% of his salary each year in the mutual fund. Joe expects a 5% salary increase each year for the next 30 years of employment. If the mutual fund will average 9% annual return over the course of his career, what can Joe expect at retirement?

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