Marites, a self-employed individual, is opening a retirement account at a bank.Her goal is to accumulate Php 1,000,000 in the account by the time she retires from work in 20 years'time. A local bank is willing to open a retirement account that pays 8% interest compounded annually throughoutthe 20 years. Marites expects that her annual income will increase by 6% yearly during her working career. Shewishes to start with a deposit at the end of year 1 (A,) and increase the deposit at a rate of 6% each year thereafter.What should be the size of her first deposit (A,)? The first deposit will occur at the end of year 1, and the subsequentdeposits will be made at the end of each year. The last deposit will be made at the end of year 20

First deposit (F) = A1 Accumulated amount needed = Php 1000000 Number of deposits (n) = 20 Growth…

Answered: Marites, a self-employed individual, is…

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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J'Mal wishes to retire at age 65. At the age of 21, he begins depositing $35 per month into an account earning 8.5% AAPR. How much money will he have when he turns 65?
Madison is planning to save for his newborn daughter’s college tuition, to be paid in 18 years. The amount he wishes to have by that time is $70,000. He plans to deposit $2,300 in a bank account every year for 18 years, starting next year. Suppose the account pays 2% interest on deposits, compounded annually. How much would he need to deposit right now, to make up the remaining amount necessary by the end of 18 years? a. $13,378.03 b. $14,529.48 c. $15,841.33 d. $17,003.96 e. $18,458.72.
Marites, a self-employed individual, is opening a retirement account at a bank. Her goal is to accumulate Php 1,000,000 in the account by the time she retires from work in 20 years’ time. A local bank is willing to open a retirement account that pays 8% interest compounded annually throughout the 20 years. Marites expects that her annual income will increase by 6% yearly during her working career. She wishes to start with a deposit at the end of year 1 (A1) and increase the deposit at a rate of 6% each year thereafter. What should be the size of her first deposit (A1)? The first deposit will occur at the end of year 1, and the subsequent deposits will be made at the end of each year. The last deposit will be made at the end of year 20.
At the birth of his grandson, Jethro commits to help pay his college education. He decides to make deposits of Php 10 400 at the end of each three months into an account for 12 years. Find the amount of annuity assuming 10% compounded quarterly.
Kate is 28 years old today and is beginning to plan for her retirement . She wants to set aside an equalamount at the end of each of the next 37 years so that she can retire at age 65 . She expects to live to the maximum ageof 90 and wants to be able to withdraw $250,000 per year for 25 years from the account on her 66th through 90th birthday. The account is expected to earn 5% annually. Determine the size of the annual deposit by kate
Sherry has a goal of retiring with $427,480 by making weekly deposits into an investment account whose annual interest rate is 1.1%. If she will retire in 25 years, how much interest will she earn?
Cecilia is 28 years old today and wants to retire at age 65. She plans to put $5,000 into an account at the end of every year starting at the end of this year and continuing until her 65th birthday. When she reaches age 65, she plans to withdraw the money in equal amounts at the beginning of every year. She assumes she will live until age 90 and make her last withdrawal on her 90th birthday. How big will each withdrawal be if she earns 9% on her investments? $143,358.86. $130,112.13. $120,661.86. $119,368.93.
Isabelle wants to save for retirement. She earns $5400 in income each month, and wishes to deposit 10% of her income into a savings acount each month. If the savings account has a nominal interest rate of 7%, compounded monthly, how much will be in the account if she retires in 35 years?
Karen Kushida is 25 years old, and intends to retire at age 65. According to the estimation of life expectancy for Canadian women, she expects to live for 20 years in retirement. Therefore, Karen needs to save sufficient funds in the next 40 years to provide for herself for the subsequent 20 years. She plans to make monthly contributions to an equity-based mutual fund earning 10.5% annually. At retirement, Karen will put her savings into guaranteed investment eertificates (GIC's), paying 5.5%. Taking Canada Pension Plan income as well as inflation into account, Karen estimates that she will need a monthly income of $4000 throughout retirement. How much must she invest cach month in mutual fund to ensure this standard of living? Assume that there is monthly compounding for the mutual fund.
Since he was 24 years old, Ben has been depositing $225 at the end of each month into a tax-free retirement account earning interest at the rate of 3.5%/year compounded monthly. Larry, who is the same age as Ben, decided to open a tax-free retirement account 5 years after Ben opened his. If Larry's account earns interest at the same rate as Ben's, determine how much Larry should deposit each month into his account so that both men will have the same amount of money in their accounts at age 65. (Round your answer to the nearest cent.)
Aziz is planning to attend college when she graduates from high school four years from now. She has made an arrangement with her father to do the household chores if her dad deposits R3570,00 at the end of every six months for the next four years into a bank account. The account pays 8,5% interest per annum, compounded semi-annually. Her father pays and additional R5 550,00 into the account for every R3 570,00 deposit he makes. The first deposit will be made six months from now. How much money will there be in the account for Aziz to pay for her college expenses? A. R12 723,40 B. R60 773,69 OC. R51 596,74 D. R84 786,00
Melissa is starting a savings for the initial capital to start a jewelry company right after graduation for 3 years. Her job base salary after graduating is expected to be $85,000 paid through equal payments at the end of every month throughout the year. She assumes a 7% increase in annual salary each year. Melissa expects to pay $1,800 monthly rent for her apartment and an extra $1,500 per month to cover other living expenses and she plans to save the rest. As her salary grows, she is plans to move to a nicer place and lifestyle. The expected rent increase is 5% every year and the expected increase in other expenses is 10%. She plans to keep this constant pattern of expenses and income. Assume a 5% nominal interest rate per year compounded monthly.1. Draw the Cash Flow Diagram2. How much money will she have at the end of year 3?3. If Melissa knows that she needs only $100,000 to start her company, how many months it takes until he saves up this amount with the current saving…

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