Right after graduating from LSU, you get your dream - job with a starting salary $100,000 annually (paid at the end of each year), which is expected to grow by 6% every year. You plan to stay in that job for 30 years and then retire. You choose to contribute to a 401K 15% of your annual salary (along with your employer's contributions). Your 401K is expected to make an annual return of 10% until you retire. Assume annual payments and annual compounding. 1. Estimate your final annual salary before retirement. 2. Estimate how much money you would have in your 401K by the time your retire (t = 30). 3. At retirement, you decide to draw an annuity for the next 25 years by placing your funds in an account that earns a guaranteed 5% per year. Estimate your annual pension.

Right after graduating from LSU, you get your dream - job with a starting salary $100,000 annually (paid at the end of each year), which is expected to grow by 6% every year. You plan to stay in that job for 30 years and then retire. You choose to contribute to a 401K 15% of your annual salary (along with your employer's contributions). Your 401K is expected to make an annual return of 10% until you retire. Assume annual payments and annual compounding. 1. Estimate your final annual salary before retirement. 2. Estimate how much money you would have in your 401K by the time your retire (t = 30). 3. At retirement, you decide to draw an annuity for the next 25 years by placing your funds in an account that earns a guaranteed 5% per year. Estimate your annual pension.

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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