Future Value At age 30 you invest $3,100 that earns 8.75 percent each year. At age 35 you invest $3,100 that earns 11.75 percent per year. In which case would you have more money at age 60? Multiple Choice о At age 30 invest $3,100 at 8.75 percent. Both yield the same amount at age 60. At age 35 invest $3,100 at 11.75 percent. There is not enough information to determine which case earns the most money at age 60.

Future Value At age 30 you invest $3,100 that earns 8.75 percent each year. At age 35 you invest $3,100 that earns 11.75 percent per year. In which case would you have more money at age 60? Multiple Choice о At age 30 invest $3,100 at 8.75 percent. Both yield the same amount at age 60. At age 35 invest $3,100 at 11.75 percent. There is not enough information to determine which case earns the most money at age 60.

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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If you save $200 a month from age of 30 to 40, then stop saving for five year, then star saving again $200 a month from age of 45 to 65. How much money should you have at age of 65, if your investment earning 11% rate of return?
You’re trying to choose between two different investments, both of which have upfront costs of K75,000. Investment G returns K135,000 in six years. Investment H returns K195,000 in 10 years. Which of these investments has the higher return?
You are planning for a very early retirement. You would like to retire at age 40 and have enough money saved to be able to withdraw $240,000 per year for the next 40 years (based on family history, you think you will live to age 80). You plan to save by making 20 equal annual installments (from age 20 to age 40) into a fairly risky investment fund that you expect will earn 10% per year. You will leave the money in this fund until it is completely depleted when you are 80 years old. (Click the icon to view Present Value of $1 table.) ( Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. How much money must you accumulate by retirement to make your plan work? (Hint. Find the present value of the $240,000 withdrawals.) (Round your final answer to the nearest whole dollar.) To make the plan work, you must…
you that will pay you $100,000 when you turn 25. If the relevant discount rate is 11 percent, how much is this fund worth today? (See Problem 3.) Calculating Rates of Return You've been offered an investment that will double your money in 12 years. What rate of return are you being offered? Check your answer using the Rule of 72. (See Problem 4.) 4.3 Calculatin
Based on the framework in the previous two problems, you have found that you need to have a total of $1,529,499 in savings at the time you retire, in 40 years. You currently only have $28,118 saved up in your retirement accounts. If you anticipate that your 80/20 investment portfolio will return an average of 8.31% per year, how much extra must you save every year to reach your goal? Assume that you'll be saving the extra amount by the end of each year.
You are considering two savings options. Both options offer a rate of return of 8.2 percent. The first option is to save $1,500, $1,500, and $2,000 at the end of each year for the next three years, respectively. The other option is to save one lump sum amount today. You want to have the same balance in your savings account at the end of the three years, regardless of the savings method you select. If you select the lump sum method, how much do you need to save today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
It has been proposed that in order to retire with the same lifestyle you currently have, you will need to have at least 1.5 million dollars saved by retirement. How much would you have to invest right now in order to achieve your goal? Assume you can find an investment that pays 5.6% compounded monthly. You're current age is 30 and youwould like to retire in 35 years. 2. What interest rate would you need in order to reach this goal if you had $8000 to invest?
Let us develop a savings plan for your retirement. We will assume that you will be fin-ished with your schooling by age 25, and work for 40 years to retire at age 65. Let us (verygenerously and optimistically) imagine that you will receive a substantial graduation giftof $10,000, and will open an investment account with it that (again, quiteoptimistically) can be expected to reliably pay 8% interest, compounded continuously. Inaddition, you will plan to save a portion of your paycheck each week, for a total of D dollarsper year, every year. Determine D, i.e how much you need to add to your account from yourearnings every year, in order to retire with a princely sum of $2,000,000 in your retirementaccount.
Consider the following four alternatives. Three are do-something and one is Do -Nothing. Alternative A B D Cost $O $50 $30 $40 Net annual benefit Useful life (years) Which is the preferred alternative? If 10% interest rate is selected. Use PW analysis. $O $14 $5 $7 5 10 10
Suppose you have $10,000 and a choice of two alternatives: A) put the money in a savings account that pays 4% per year, and B) buy a stock that has a 50% chance to gain 15% in value after 1 year, and a 50% chance to lose 5%. What will be the expected return for either alternative, and which one would you choose? Why?

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