In January, you start a job with Acme manufacturing at salary of $66,000 per yearpaid in equal amounts over 12 months. You have negotiated for a guaranteed 3%raise each year while you work at Acme and you decide to save 10% of yourmonthly income for retirement. Assume interest equals 1%/month compoundedmonthly. What is the balance of your retirement account at the end of five years?

Present value (PV) annuity factor, with discount rate (=r) and period (=n), is calculated as shown…

Answered: In January, you start a job with Acme…

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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You have finished your time at Kelley and need to start thinking about retirement. You plan on working for 30 moreyears and then retire. Upon your retirement 30 years from today, you plan to have enough money to withdraw $75,000every 6 months, with the first payment coming exactly six months after your retirement day. You expect yourretirement account to earn a return of 8% APR (stated rate), compounded quarterly, on all funds in the retirementaccount. Assume you want to draw on the retirement fund for 20 years after your retirement (40 semiannualwithdrawals), and you want to fund the account with annual level payments, with the first payment being made oneyear from today and the last payment occurring the day of your retirement (30 total payments into the retirementaccount). a) How much do you need in the account on your retirement day to fund the expected semiannual withdrawals?b) How much does each annual payment need to be for the next 30 years to fund the retirement account?
Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $60,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 8 percent of your annual salary in an account that will earn 10 percent per year. Your salary will increase at 3 percent per year throughout your career. How much money will you have on the date of your retirement 40 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Future value
You have $500,000 saved for retirement. Your account earns 5% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 20 years
You are leaving today on an 3-year trip during which time you will incur expenses of $40,000 at the end of each year. How much must you invest today to have enough to meet your expenses? The annual percentage rate is 12%.
Assume that you will have a 10-year, $20,000 loan to repay when you graduate from college next month. The loan, plus 10 percent annual interest on the unpaid balance, is to be repaid in 10 annual installments of $3,255 each, beginning one year after you graduate. You have accepted a well-paying job and are considering an early settlement of the entire unpaid balance in just three years (immediately after making the third annual payment of $3,255). Prepare an amortization schedule showing how much money you will need to save to pay the entire unpaid balance of your loan three years after your graduation. (Round your answers to the nearest dollar amount. Enter all amounts as positive numbers.) Interest Period Date of Graduation Year 1 Year 2 Year 3 Annual Payment Annual Interest Expense @10% a. Actual net-of-tax interest cost b. Effective interest rate Reduction in Unpaid Balance Unpaid Balance One of the advantages of borrowing is that interest is deductible for income tax purposes. a.…
You are expected to retire in 35 years from today. If you make an annual deposit of $20,500 at the end of each year into an investment account that pays 6.88% annually, how much money will your retirement account have at the end of 35 years if the interest in compounded.
Assume that you will have a 10-year, $10,000 loan to repay when you graduate from college next month. The loan, plus 8 percent annual interest on the unpaid balance, is to be repaid in 10 annual installments of $1,490 each, beginning one year after you graduate. You have accepted a wellpaying job and are considering an early settlement of the entire unpaid balance in just three years (immediately after making the third annual payment of $1,490). Prepare an amortization schedule showing how much money you will need to save to pay the entire unpaid balance of your loan three years after your graduation. (Round amounts to the nearest dollar.)
You decide to invest in an instrument that pays 5% annual capitalizable interest each semester. If you want to get an amount of $1,000,000 at the end of 20 years, giving contributions at the end of each month, how much does each monthly contribution have to be to reach the goal?
Suppose a recent college graduate's first job allows her to deposit $250 at the end of each month in a savings plan that earns 9%, compounded monthly. This savings plan continues for 14 years before new obligations make it impossible to continue. How much money has accrued in the account at the end of the 14 years? (Round your answer to the nearest cent.) $ If the accrued amount remains in the plan for the next 15 years without deposits or withdrawals, how much money will be in the account 29 years after the plan began? (Round your answer to the nearest cent.) $
If you have been hired at an annual salary of $23000and expeck to receive annual increases of 5% what will your salary be when you begin your seventh year?
Catherine Dohanyos plans to retire in 20 years. She will make 20 years of monthly contributions to her retirement account. One month after her last contribution, she will begin the first of 10 years of withdrawals. She wants to withdraw $2400 per month. How large must her monthly contributions be in order to accomplish her goal if the account earns interest of 7.3% compounded monthly for the duration of her contributions and the 120 months of withdrawals? Question content area bottom Part 1 The amount of her monthly contributions must be Senter your response here. (Round to the nearest cent as needed.)
You decide to make monthly payments into a retirement fund earning 4.75% compounded monthly. Note: Payments are made at the end of each period.

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