Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,400 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,900 every year for 30 years. Plan 3 starts after 20 years and puts away $4,400 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 8%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years? (Select the best response.) Plan 1 because it offers the highest future value

Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,400 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,900 every year for 30 years. Plan 3 starts after 20 years and puts away $4,400 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 8%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years? (Select the best response.) Plan 1 because it offers the highest future value

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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Your employer automatically puts 5 percent of your salary into a 401(k) retirement account each year. The account earns 8% interest. Suppose you just got the job, your starting salary is $50000, and you expect to receive a 3% raise each year. For simplicity, assume that interest earned and your raises are given as nominal rates and compound continuously. Find the value of your retirement account after 35 years Value = $
show all excel formulas/ work answering the following: Saving For Retirement You are offered the opportunity to put some money away for retirement. You will receive five annual payments of $25,000 each beginning in 40 years. How much would you be willing to invest today if you desire an interest rate of 12%?
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At the end of each year a self employed person deposits 1500 in a retirement account that earns 10 percent annually. How much will be in the account when the individual retires at age 65 if the savings program starts when the person was age 45?
Assume that Social Security promises you $43,000 per year starting when you retire 45 years from today (the first $43,000 will get paid 45 years from now). If your discount rate is 5%, compounded annually, and you plan to live for 17 years after retiring (so that you will receive a total of 18 payments including the first one), what is the value today of Social Security's promise? ... The value today of Social Security's promise is $ the nearest cent.) (Round to
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(Future value of an ordinary annuity) You are graduating from college at the end of this semester and after reading the The Business of Life box in thischapter, you have decided to invest $4,700 at the end of each year into a Roth IRA for the next 40 years. If you earn 8 percent compounded annually on your investment, how much will you have when you retire in 40 years? How much will you have if you wait 10 years before beginning to save and only make 30 payments into your retirement account?
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