Reese is comparing retirement plans with prospective employers. ABC, Inc., offering a salary of $58,000, will match 75 percent of his contributions up to 10 percent of his salary, his maximum contribution. XYZ company will match 100 percent of this contribution up to 6 percent of salary, but he can contribute up to 15 percent of his income. XYZ Company is offering a $54,000 salary. If Reese assumes that he will contribute the maximum amount allowed and keep these first-year retirement funds invested for 30 years with a 9 percent return, how much would each account be worth? ABC Total Contribution ABC Future Value of Contribution XYZ Total Contribution XYZ Future Value of Contribution Choose... Choose... + Choose... # Choose. 4

Reese is comparing retirement plans with prospective employers. ABC, Inc., offering a salary of $58,000, will match 75 percent of his contributions up to 10 percent of his salary, his maximum contribution. XYZ company will match 100 percent of this contribution up to 6 percent of salary, but he can contribute up to 15 percent of his income. XYZ Company is offering a $54,000 salary. If Reese assumes that he will contribute the maximum amount allowed and keep these first-year retirement funds invested for 30 years with a 9 percent return, how much would each account be worth? ABC Total Contribution ABC Future Value of Contribution XYZ Total Contribution XYZ Future Value of Contribution Choose... Choose... + Choose... # Choose. 4

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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Similar questions

Kristine, who is 45 years old, is an employee of Squaresoft, Inc. Squaresoft sponsors a SEP IRA and would like to contribute the maximum amount to Kristine's account for the plan year. If Marleen earns $100,000 per year, what is the maximum contribution Squaresoft can make on her behalf to the SEP IRA? $18,500 $25,000 $55,000 $5,500
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.
OHaganBooks.com has just introduced a retirement package for its employees. Under the annuity plan operated by Sleepy Hollow, the monthly contribution by the company on behalf of each employee is $700. Each employee can then supplement that amount through payroll deductions. The current rate of return of Sleepy Hollow's retirement fund is 7.1%. Jane Callahan, the website developer at OHaganBooks.com, plans to retire in 10 years. She contributes $1,000 per month to the plan (in addition to the company contribution of $700). Currently, there is $40,000 in her retirement annuity. How much (to the nearest dollar) will it be worth when she retires? (Assume interest is compounded monthly.) $
Ed wants to start saving for retirement by investing in his 401(k). Over the next 30 years, he wants to save up a total of $1,000,000. He will make contributions from his monthly paychecks (his annual salary is $144,000) and his employer will match 25% of his contributions. What percent of each monthly paycheck does he need to contribute to his 401(k) to meet his goal, if his account earn 8% interest? O 3.47% O 3.12% 4.86% O 4.47%
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Problem 13-78 Part b (Static) b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the traditional IRA)?
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 father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $50,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24 additional annual payments. Annual inflation is expected to be 3%. He currently has $235,000 saved, and he expects to earn 9% annually on his savings. How much must he save during each of the next 10 years (end-of-year deposits) to meet his retirement goal? Do not round intermediate calculations. Round your answer to the nearest dollar.
Earl Ezekiel wants to retire in San Diego when he is 65 years old. Earl is now 49. He believes he will need $470,000 to retire comfortably. To date, Earl has set aside no retirement money. Assume Earl gets 10% interest compounded semiannually. How much must Earl invest today to meet his $470,000 goal? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Investment
You will need a calculator for this problem. Sanchez earns $4,000, and she wants to save it for retirement, which is 10 years away. She can either save it in a taxable account or put it into a Roth IRA. Suppose that Sanchez can receive an annual rate of return of 8 percent and her marginal tax rate is 25 percent. By the time she reaches retirement, how much money would she have in either option? [Note: Sanchez has to pay tax on the $4,000, so she cannot put the full amount either into the taxable account or the Roth IRA.]
Joey has been offered a job at a salary that would put him in the 24% marginal tax bracket. In addition to his salary, he would receive health insurance coverage. Another potential employer does not offer health insurance but has agreed to match the first offer on an after-tax and insurance basis. The cost of health insurance comparable to that provided by the other potential employer is $6,000 per year. How much more in salary must the second potential employer pay so that Joey's financial status will be the same under both offers? $6,000 $7,895 $7,440 $744 $1,440
Joe wants to own a home in the future. He asks you describe an advantages and disadvantage of a FRM versus an ARM. He then asks you to describe the advantages and disadvantages of a 15-year loan versus a 30-year loan. He also wants to know how the portion of the home payment that comprises interest changes over the years assuming he takes out an FRM. Is there anything he can do to reduce the total amount he’ll pay for the home? What else would be added to his monthly mortgage payment? What are three benefits of home ownership? What are three benefits of renting?
Devin has an opportunity to save $285 per month at an APR of 4.8% in a 401K plan through work. He plans to retire in 25 years. The income taxes are at 32% for him. (1) How much will Devin have deposited into the account by the time he retires? (Express your answer rounded correctly to the nearest cent!) (2) How much interest will Devin have earned on his investment by the time he retires? Use Excel's FV function to help answer this question. (Express your answer rounded correctly to the nearest cent!) 2$ (3) If Devin's company offers a 30% matching contribution, use Excel's FV function to determine how much his investment will be worth when he retires. (Express your answer rounded correctly to the nearest cent!)

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