Suzy wants to retire in 30 years. She expects tolive 25 years after retirement. She prepares asavings plan to meet the objectives: First, afterretirement she would like to be able to withdraw$20,000 per month. The first withdrawal willoccur at the end of the first month afterretirement. Second, she would like to leave herdaughter a $500,000 inheritance. Lastly, shewants to set up a fund that will pay $5000 permonth forever to her favorite charity after shedies. These payments will begin one month aftershe dies. All the monies earn 10% annual ratecompounded monthly. How much will she haveto save per month to meet these objectives? Shewishes to make her first deposit from now andthe last deposit on the day she retires.

There is need of planning for retirement and that must be based on time value of money and based on…

Suzy wants to retire in 30 years. She expects to live 25 years after retirement. She prepares a savings plan to meet the objectives: First, after retirement she would like to be able to withdraw $20,000 per month. The first withdrawal will occur at the end of the first month after retirement. Second, she would like to leave her

Suzy wants to retire in 30 years. She expects to live 25 years after retirement. She prepares a savings plan to meet the objectives: First, after retirement she would like to be able to withdraw $20,000 per month. The first withdrawal will occur at the end of the first month after retirement. Second, she would like to leave her

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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Six years ago, Gladys opened a retirement account with an initial deposit of $14,000. Each year since then, she has added $2,000 to the account at the end of each year. She plans on contributing for the next 25 years. How would you determine the future value of her account at retirement? O Future value of a lump sum and future value of an annuity. O Future value of an annuity and the present value of a lump sum. O Future value of a lump sum and present value of an annuity. O Future value of an annuity.
Your friend is celebrating her birthday and wants to start saving for retirement. She has provided you with the following information: Years until retirement: 30 Amount to withdraw each year in retirement: $120,000 Years to withdraw in retirement: 12 Interest rate while saving: 9% Interest rate in retirement: 6% Saved today (nest egg): $25,000 The first deposit will be made one year from today, and the last deposit will be made on the day she retires. Her first withdrawal will not occur until one year after she retires, and she plans to spend her entire nest egg. Calculate the amount she must deposit each year to reach her retirement goal. (Round to 2 decimals)
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $24,000 per month for 25 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 15 years at an estimated cost of $659,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $800,000 to his nephew Frodo. He can afford to save $1,900 per month for the next 15 years. If he can earn a 11 percent EAR before he retires and a 8 percent EAR after he retires, how much will he have to save each month in Years 16 through 30? Multiple Choice $5,807.83 $5,923.99 $6,852.51 $7,242.45 $5,691.67
A couple is saving for retirement with three different accounts. The table below shows the current balances in their accounts, along with their yearly contribution, and the yearly return on each account. The couple will retire in 20.00 years and pool the money into a savings account that pays 3.00% APR. They plan on living for 29.00 more years and making their yearly withdrawals at the beginning of the year. What will be their yearly withdrawal? Account Fidelity Mutual Fund Vanguard Mutual Fund Employer 401k Balance $23,497.00 $187,441.00 $314,214.00 Yearly Contribution $1,000.00 $10,000.00 $15,000.00 APR 6.00% 7.00% 6.00%
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
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.
A couple is saving for retirement with three different accounts. The table below shows the current balances in their accounts, along with their yearly contribution, and the yearly return on each account. The couple will retire in 24.00 years and pool the money into a savings account that pays 4.00% APR. They plan on living for 30.00 more years and making their yearly withdrawals at the beginning of the year. What will be their yearly withdrawal? Yearly Contribution $1,000.00 Account Fidelity Mutual Fund Vanguard Mutual Fund Employer 401k Balance $21,452.00 $183,845.00 $307,061.00 Submit Answer format: Currency: Round to: 2 decimal places. $10,000.00 $15,000.00 APR 7.00% 7.00% 6.00%
A couple is saving for retirement with three different accounts. The table below shows the current balances in their accounts, along with their yearly contribution, and the yearly return on each account. The couple will retire in 23.00 years and pool the money into a savings account that pays 3.00% APR. They plan on living for 28.00 more years and making their yearly withdrawals at the beginning of the year. What will be their yearly withdrawal? Yearly Contribution $1,000.00 $10,000.00 Account Fidelity Mutual Fund Vanguard Mutual Fund Employer 401k Balance $23,186.00 $180,962.00 $315,917.00 Submit Answer format: Currency: Round to: 2 decimal places. $15,000.00 APR 6.00% 8.00% 6.00%
Munira Al Falasi is 40 years old. She wants to begin saving for retirement with the first payment to come 1 year from now. She can save $5,000 per year with 9% rate of return. How much money will Munira have at the age of 65? How much money will Munira have at the age of 70? Munira expects to live for 20 years, if she retires at 65; and for 15 years, if she retires at 70. If her investments continue to earn the same rate of return, how much will Munira be able to withdraw at the end of each year after her retirement at each retirement age? Munira expects to live for 20 years, if she retires at 65: Munira expects to live for 15 years, if she retires at 70:
Andrea, a self-employed individual, wishes to accumulate a retirement fund of $250,000. How much should she deposit each month into her retirement account, which pays interest at a rate of 4.5%/year compounded monthly, to reach her goal upon retirement 20 years from now? (Round your answer to the nearest cent.
Manya and Sarah are both starting out in their careers. They choose two different paths to saving in their 401k accounts for their retirements. Manya is 23 years old and decides to start depositing $400 monthly in her 401k which will earn 9.5% APR. Manya will retire at the age of 70. a) How many years will Manya be saving money in her 401k? years b) How much will be in Manya's 401k when she retires? c) How much will Manya have deposited herself over her years of working from her salary? d) How much will Manya have earned in interest over her years of working? Sarah waits to begin depositing money into a 401k (for various reasons that seemed important at the time...) until she was 40 years old. She decides to deposit twice as much as Manya per month hoping to catch up. Assume that Sarah gets the same 9.5% APR and will retire at the same age of 70. e) How many years will Sarah be saving money in her 401k. years f) How much will Sarah be depositing in her account each month? g) How much…
Jan wants to plan for her daughter's education. Her daughter, Rachel was born today and will go to college at age 18 for five years. Tuition is currently $15,000 per year, in today's dollars. Jan anticipates tuition inflation of 6% and believes she can earn an 11% return on her investment. How much must Jan save at the end of each year, if she wants to make her last payment at the beginning of her daughter's first year of college? $4,680.37 $7,334.72 $3,882.03 $2,547.54

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