It's All About the Benjamins!3 You and your co-worker Benjamin have both just turned 22 and are having dinner to celebrate. You begin talking about4 saving for retirement. Your company offers an invesment portfolio that has historically earned 11% interest, compounded5 semi-annually. You both decide to invest in this portfolio, but you have different investment strategies.67 Benjamin plans to start immediately. He has decided to invest a certain amount of money annually for exactly 8 years. At thatpoint, Benjamin will stop investing in the account and will let the money grow until he turns 65.8910 You decide you'd rather wait until you are in a better place financially, so you are not going to begin investing until age 30.11 You will invest the same annual amount as Benjamin and plan to invest that amount every year until you reach age 65.1213 You and Benjamin make a friendly bet to see who will have more money in their retirement account at age 65!1415 Part I16Choose an amount between$1,000 and $10,000 for p, theannual amount of moneyinvested by both you andBenjamin. Enter the chosenamount in the green box.22231819 Part II20 How much does Benjamin have in his account after 1 year? Use the compound interest formula and show all work.21p201H

Future value annuity due Annuity due is the case when payment starts immediately. With interest rate…

Answered: ou and your co-worker Benjamin have…

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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Brad is working with a financial planner and is confident that he can invest in mutual funds that will average 10% annual returns. If he wants to retire after 40 years with $2 million in his retirement account, how much does Brad need to deposit at the end of each of the 40 years?
A 20-year-old student decided to set aside $100 on his 21st birthday for investment. Each subsequent year through his 55th birthday, he plans to increase the investment on a $100 arithmetic gradient. He will not set aside additional money after his 55th birthday. If the student can achieve a 12% rate of return, what is the future worth on the investment on his 65th birthday?
Alex is interested in saving for retirement and lands a job that offers to contribute one-third of what he contributes to a 401k account. Alex is nervous about losing money so he opts for a low-risk investment that has an APR of 3.1%. If Alex is 33 years away from retiring, and contributes $150 each month, Excel reports that there will be $135,032.93 in the account when he retires.
Marco is plans to retire in 16 years. He wants you to assume he will be retired for 19 years before he dies. You calculated that Marco needs $1,758,809 as a lump sum at the beginning of retirement. Use an investment return of 7 percent and an inflation assumption of 1.2 percent. How much money will he need to save monthly to have this amount when he begins retirement? (Round the final answer to 2 decimal places)
A couple will retire in 40 years. They plan to spend $50,000 of their savings each year, with the withdraw coming at the end of the year. They expect retirement to last for 25 years. They believe they can earn 9% interest on retirement savings by investing in high quality mutual funds. They realize too, that in 20 years they will also need to spend $80,000 (one time) to cover costs of their child's education. If the couple makes year-end annual payments starting in year 1 into a savings plan, how much does the couple need to save per year to cover both future college and future retirement costs? (round interim calculations to dollars and cents. Round your answer to the nearest dollar)
By the end of this year you would be 35 years old and you want to plan for your retirement. You wish to retire at the age of 65 and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened now your retirement account with 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate, throughout your retirement years. Suppose you think if you were to retire right now you would have needed $50,000 each year to supplement your social security and maintain your desired lifestyle. But because there is on average 3% annual inflation, when you retire in 30 years from now you need more than $50,000 per year to maintain the lifestyle you like. How much annual payment in the retirement account is needed to accumulate the amount needed to purchase the bond…
Jennifer establishes an investment account to pay for college expenses for her daughter. She plans to invest X at the beginning of each month for the next 20 years. Beginning at the end of the 17th year, she will withdraw 55,000 annually. The final withdrawal at the end of the 20th year will exhaust the account. She anticipates earning an annual effective yield of 11% on the investment. Calculate X. 276.80 307.70 317.60 346.20 349.10
Donald is updating his estate plan for himself and his family. He would like to provide an income of $3000 every month starting 10.5 years from now and continuing for the next 20 years. He has started his account with an initial deposit of $10,000 and he knows his life insurance, maturing in 5 years, will have a cash value of $150,000. To make up the difference, Donald has decided to make monthly deposits in the account. How much should each deposit be if all interest is computed at 6 percent compounded monthly?
When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $600 at the end of each quarter into an account paying 8.1% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same interest rate, but make no further deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $600 at the end of each quarter in an account paying 8.1% interest, compounded quarterly for 35 years. Complete parts (a) through (e) below. a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the following questions. Choose the correct answer below. O A. Joe will have more in his account after 45 years. Sarah contributed more money overall, but Joe was earning 8.1% interest per quarter for 35 years. Sarah will have more in her…
Your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $130,000 from her savings account on each birthday for 24 years following her retirement, the first withdrawal will be on her 66th birthday. Your friend intends to invest her money at 10.7% interest per year. How much money must she accumulate by the time she retires in order to make these withdrawals? (Round your answer to the nearest dollar)

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