Monica has decided that she wants to build enough retirement wealth, if invested at 10 percent per year, to provide her with $4,000 cmonthly income for 20 years. To date, she has saved nothing, but she still has 25 years until she retires.How much money does she need to contribute per month to reach her goal? First compute how much money she will need atretirement, then compute the monthly contribution to reach that goal.Note: Do not round intermediate calculations and round your final answer to 2 decimal places.Contribution per month

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Answered: Monica has decided that she wants to…

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 parents will retire in 26 years. They currently have $230,000 saved, and they think they will need $1,250,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
A couple will retire in 50 years; they plan to spend about $34,000 a year (in current dollars) in retirement, which should last about 25 years. They believe that they can earn a real interest rate of 7% on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Annual savings $ Annual savings 761.74 b. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $64,000 on their child's college education? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 1,370.95
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