Louis is 29 years old today. He is a conservative person, and is thinking about his retirement when he reaches the age of 72. He decides to invest $8,000 at regular annual intervals for 20 years, starting from today. The fund that he is investing in will give him a return of 7.7% per annum. He will then leave the money in the account to grow further until he retires when he is 72 years old. How much will Louis have in the fund when he turns 72? a. $2,262, 482 b. $2,100,726 c. $ 2,325,007 d. $2,150.79 No excel please

Louis is 29 years old today. He is a conservative person, and is thinking about his retirement when he reaches the age of 72. He decides to invest $8,000 at regular annual intervals for 20 years, starting from today. The fund that he is investing in will give him a return of 7.7% per annum. He will then leave the money in the account to grow further until he retires when he is 72 years old. How much will Louis have in the fund when he turns 72? a. $2,262, 482 b. $2,100,726 c. $ 2,325,007 d. $2,150.79 No excel please

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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Mike and Emily each have invested $100, 000 in an investment account. No other contributions will be made to their investment account. Both have the sarne goal; they each want their account to reach $3,000,000 at which time each will retire. Mike has his money invested in risk free securities with an expected return of 12% compounded monthly. Emily has her money invested in a stock fund with an expected return of 15% compounded quarterly. How many years after Emily retires will Mike retire?
Joseph Kirn has just inherited $827,790 which he would like to use as part of his retirement nest egg. He invested the funds at a 3.47 percent annual rate compounded annually. Joseph will reach age sixty in 17 years and will retire early. Now he would like to know how much he could withdraw from the fund in equal installments at the end of each year from the year he reaches age 60 until he reaches age 70½, the year he must start withdrawing funds from his individual retirement account (IRA). Joseph assumes the funds will continue to earn at a 3.47 percent annual rate. In other words, Joseph would like to know the annual year-end payment from an eleven-year annuity (from age 60 to the year he will be 70½), earning 3.47 percent annually. Round the answer to two decimal places.
Molly Lincoln, a 25-year-old personal loan officer at First National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $3,500 per year for her retirement fund and assumes that she'll retire at age 65. How much will Molly have accumulated when she turns 65 if she invests in equities and earns 8 percent on average? Round your answer to the nearest dollar. Molly is urging her friend, Isaac Stein, to start his plan right away, too, because he's 45. What would his nest egg amount to if he invested in the same manner as Molly and he, too, retires at age 65? Round your answer to the nearest dollar. 2a. Nest egg at 4% 2b. Nest egg at 8%
Your sister turned 35 today, and she is planning to save $60,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund that's expected to provide a return of 7.5% per year. She plans to retire 30 years from today, when she turns 65, and she expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can she spend each year after she retires? Her first withdrawal will be made at the end of her first retirement year. a. $266,770.46 b. $556,561.79 c. $598,303.93 d. $517,731.90 e. $248,158.57
Simon just turned 66 and is trying to decide whether to take his Social Security benefits today or to wait until he is 70. The risk-free rate of interest is 2%, and Simon anticipates that this rate will not change in the foreseeable future. If Simon decides to take his benefits at age 66 (his current age), he will get 12*$2,216 = $26,592 per year. If he waits 4 years, he will get $3,067 per month. 1) Simon estimates that he will die on his 85th birthday. Should he wait until 70 or take the Social Security now? Note: In doing this problem, assume that benefits are paid at the end of the year in which they are taken. Also assume that Simon will die exactly on his birthday. Your Retirement Benefit Estimate The amount you receive when you first start your benefits sets the base amount you will get for the rest of your life. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of Jime. Assuming you continue earning about the same…
Two people plan to invest $50,000. Matt is going to invest it in one lump sum and leave it in the account for 25 years to use for retirement. Sarah is going to invest $2000 per year for 25 years and will also use the money in the account for retirement. Is it reasonable to expect that Matt will have more money in his account than Sarah does in 25 years if both accounts earn the same interest?
Colin is 40 years old and wants to retire in 27 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 95. He currently has a salary of $150,000 and expects that he will need about 75% of that amount annually if he were retired. He can earn 8 percent from his portfolio and expects inflation to continue at 3 percent. Some years ago, he worked for the government and expects to receive an annuity that will pay him $20,000 in today's dollars per year beginning at age 67. The annuity includes a cost of living adjustment, which is equal to inflation. Colin currently has $200,000 invested for his retirement. His Social Security benefit in today's dollars is $30,000 per year at normal age retirement of age 67. How much does he need to accumulate at age 67 exclusive of his pension and Social Security benefits? ANSWER CHOICES: $2.2 million $2.1 million $2.8 million $2.9 million
Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to continue at 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security benefit in today’s dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? 1. $6,245. 2. $7,659. 3. $8,432. 4. $9,252.
The Ali plan to retire and start receiving their Social Security benefits at the same time, when Jimmy is 67 and Lucy is 62 years old. Their monthly Social Security retirement benefits at those ages in today's dollars are estimated to be $3,200 for Jimmy and $2,000 for Lucy. They think their expenses in retirement in today's dollars will be 70% of their total cash outflows now. Other than Social Security, they will rely on their retirement savings in order to meet their retirement expenses. They want to assume they will die in the same year, when Jimmy is 95 and Lucy is 90 years old.Determine what the payments will be in the distribution phase. These will be the withdrawals Jimmy and Lucy will need to take monthly from their accounts, in order to meet their retirement expenses. How much is that monthly amount?Note: this question is asking about the withdrawals they will need, not about the expenses they will be incurring monthly.

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