Janine is 35 and has a good job at a biotechnology company. Janine estimates that she will need $899,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $27,500 a year. (She expects that Social Security will pay her an additional $17,000 a year.) She currently has $4,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 9 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have to accumulate in her company's 401(k) plan over the next 30 years in order to reach her retirement income goal? Use Exhibit 1-A. (Round time value factor to 3 decimal places. Round intermediate and final answer to 2 decimal places.) 401(k) accumulation
Janine is 35 and has a good job at a biotechnology company. Janine estimates that she will need $899,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $27,500 a year. (She expects that Social Security will pay her an additional $17,000 a year.) She currently has $4,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 9 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have to accumulate in her company's 401(k) plan over the next 30 years in order to reach her retirement income goal? Use Exhibit 1-A. (Round time value factor to 3 decimal places. Round intermediate and final answer to 2 decimal places.) 401(k) accumulation
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
Related questions
Question
Transcribed Image Text:Janine is 35 and has a good job at a biotechnology company. Janine estimates that she will need $899,000 in her total retirement nest
egg by the time she is 65 in order to have retirement income of $27,500 a year. (She expects that Social Security will pay her an
additional $17,000 a year.) She currently has $4,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will
grow at an annual rate of 9 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have
to accumulate in her company's 401(k) plan over the next 30 years in order to reach her retirement income goal? Use Exhibit 1-A.
(Round time value factor to 3 decimal places. Round intermediate and final answer to 2 decimal places.)
401(k) accumulation
Transcribed Image Text:Exhibit 1-A Future value (compounded sum) of $1 after a given number of time periods
6%
1.060
1.124
2%
1.020
3%
1.030
1.061
5%
1.050
1.103
Period
7%
1.070
1.145
1%
4%
8%
9%
10%
11%
1.040
1.082
1.125
1.170
1.217
1.265
1.316
1.010
1.020
1.030
1.100
1.210
1
1.080
1.090
1.110
2
1.166
1.188
1.295
1.412
1.040
1.232
3
1.061
1.093
1.158
1.191
1.225
1.260
1.331
1.368
1.126
1.159
1.216
1.360
1.469
4
1.041
1.082
1.262
1.311
1.464
1.518
1.338
1.419
1.504
1.594
1.689
1.791
1.898
1.685
1.870
1.403
1.539
1.677
1.611
1.772
1.949
2.144
2.358
1.051
1.104
1.276
6.
1.062
1.126
1.194
1.340
1.501
1.587
1.072
1.230
1.606
1.718
1.838
1.967
2.105
7
1.149
1.407
1.714
1.828
2.076
8.
1.083
1.172
1.267
1.369
1.477
1.851
1.993
2.305
1.195
1.305
2.558
1.423
1.480
1.539
1.999
2.159
2.332
2.518
2.720
1.094
1.551
2.172
1.344
1.384
1.629
1.710
10
1.105
1.219
2.367
2.594
2.839
2.853
3.138
3.452
3.797
4.177
4.595
5.054
5.560
11
1.116
1.243
2.580
3.152
12
1.127
1.268
1.426
1.601
1.796
2.012
2.252
2.813
3.498
1.294
1.665
3.066
1.886
1.980
2.079
2.183
2.410
1.138
1.149
2.133
2.261
13
1.469
3.883
1.319
1.346
3.342
3.642
3.970
4.328
4.717
5.142
5.604
14
1.513
1.732
2.579
2.937
4.310
2.759
1.558
1.605
4.785
5.311
15
1.161
1.801
2.397
3.172
1.173
1.184
1.196
1.208
2.540
2.693
2.854
3.026
3.207
4.292
5.743
10.286
18.420
3.426
3.700
3.996
4.316
4.661
16
1.373
1.873
2.952
1.948
2.026
2.107
2.191
2.666
3.243
17
1.400
1.653
2.292
3.159
5.895
1.428
1.702
3.380
3.617
3.870
5.427
18
2.407
6.544
2.527
2.653
3.386
4.322
7.040
11.467
6.116
6.727
10.835
17.449
45.259
117.391
19
1.457
1.754
7.263
20
1.220
1.486
1.806
8.062
1.282
2.094
2.427
6.848
8.623
13.268
25
1.641
13.585
22.892
65.001
30
1.348
1.811
7.612
10.063
14.974
29,457
21.725
46.902
31.409
74.358
1.489
2.208
2.692
40
3.262
4.801
50
1.645
4.384
7.107
184.565
Period
12%
13%
14%
15%
16%
17%
18%
19%
20%
25%
30%
1.130
1.277
1.140
1.300
1.150
1.323
1.170
1.369
1.602
1.200
1.440
1.728
2.074
2.488
2.986
3.583
1.160
1.180
1.392
1.643
1.190
1.416
1
1.120
1.250
1.300
2
1.254
1.346
1.563
1.690
1.405
1.561
2.197
2.856
3.713
4.827
6.275
1.443
1.482
1.521
1.685
1.953
1.630
1.749
2.005
2.386
4.
1.574
1.689
1.811
1.874
1.939
2.441
1.762
1.842
1.925
2.100
2.436
2.826
2.192
2.288
3.052
3.815
4.768
5.960
7.451
5
2.011
6.
1.974
2.082
2.195
2.313
2.565
2.700
2.840
2.211
2.353
2.658
3.004
3.395
3.836
2.502
3.001
2.660
3.059
3.518
3.185
3.759
4.435
5.234
6.176
3.379
4.021
4.785
7
2.476
2.773
3.106
3.479
8.
2.853
3.278
3.511
4.300
8.157
3.252
3.707
4.226
5.160
3.803
4.411
5.117
4.108
10.604
4.046
5.695
13.786
17.922
10
4.807
6.192
9.313
5.624
6.580
7.699
11.642
14.552
18.190
22.737
28.422
11
4.652
6.777
7.430
12
13
3.896
4.335
4.818
5.350
5.936
7.288
8.064
8.916
23.298
4.898
5.535
6.254
5.492
6.153
7.076
8.137
9.358
10.761
10.699
12.839
15.407
4.363
6.886
7.988
8.599
10.147
9.596
11.420
13.590
30.288
39.374
51.186
14
4.887
6.261
9.007
15
5.474
7.138
9.266
10.539
11.974
16
6.130
7.067
8.137
10.748
12.330
14.129
16.172
18.488
35.527
66.542
6.866
7.986
9.024
10.197
11.523
12.468
14.463
14.426
16.879
19.748
23.106
50.658
16.672
19.673
23.214
27.393
62.669
143.371
750.378
3927.357
19.244
22.901
27.252
32.429
22.186
44.409
55.511
69.389
86.736
264.698
807.794
7523.164
70064.923
86.504
112.455
17
9.276
12.375
14.232
16.367
18
7.690
10.575
26.623
12.056
13.743
26.462
50.950
188.884
700.233
16.777
19.461
31.948
38.338
95.396
237.376
19
8.613
146.192
190.050
705.641
2619.996
36118.865
20
9.646
40.874
85.850
378.721
1670.704
77.388
184.675
1051.668
5988.914
25
17.000
21.231
32.919
29.960
66.212
267.864
1083.657
30
39.116
111.065
533.869
2566.215
1469.772|
9100.438
40
93.051
132.782
50
289.002
450.736
497929.223
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