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 25years. They believe they can earn 9% interest on retirement savings by investing in highquality 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 coupleneed to save per year to cover both future college and future retirement costs? (roundinterim calculations to dollars and cents. Round your answer to the nearest dollar)Multiple ChoiceOnone of the choices278025643017

Present value refers to the worth of the amount in current times that is expected to be received in…

vill retire in 40 years. They plan to spend $50,000 of their sav ithdraw coming at the end of the year. They expect retirement ey believe they can earn 9% interest on retirement savings by in tual funds. They realize too, that in 20 years they will also nee one time) to cover costs of their child's education. If the coup ■l payments starting in year 1 into a savings plan, how much doe ve per year to cover both future college and future retirement culations to dollars and cents. Round your answer to the neare

vill retire in 40 years. They plan to spend $50,000 of their sav ithdraw coming at the end of the year. They expect retirement ey believe they can earn 9% interest on retirement savings by in tual funds. They realize too, that in 20 years they will also nee one time) to cover costs of their child's education. If the coup ■l payments starting in year 1 into a savings plan, how much doe ve per year to cover both future college and future retirement culations to dollars and cents. Round your answer to the neare

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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Question

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)
Multiple Choice
O
none of the choices
2780
2564
3017

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Step 3: Calculations of retirement amount needed

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Step 4: Calculation of future value of education

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Step 5: Calculations of annual savings required

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You plan to retire in 30 years and plan on saving $15,000 annually,starting next year, for the next 30 years. You expect to need $120,000about 18 years from now for college tuition for your recently borndaughter which must be paid out of these savings. You expect to live 35years during retirement (the first retirement payment will be 31 yearsfrom today) If interest rate is 5%, but you want to keep the same retirement quality of life as if the interest rate is 8.15%. How much extra money do you need to save annually?
To save for her newborn son's college education, Lea Wilson will invest P1,000 at the beginning of each year for the next 18 years. The interest rate is 12 percent. What is the future value? * 55,750. O 7,690 34,931. O 63,440. O 62,440.
An engineer planning for her retirement will deposit 10% of her salary each year into a stock found. The initial balance in her stock found (year 0) is S20,000. If her salary this year is $120,000 (end of year 1) and she expects her salary to increase by 5% each year, what will be the future worth of the found after 25 years if it earns 15% per year? O $4,202.290.77 O 5,480,462.35 O 5,315,867.58 O $4,138,818.64 O 3,543,911.72
The AGI of the Newtons, a married couple, is $199,000 this year. They would like to contribute to a Roth IRA. a. What is the maximum amount this couple can contribute to a Roth IRA? b. Now Supposed that the Newtons will report AGI of less than $196,000 and put $12,000 each year into their Roth IRA for 20 years, earning an annual return of 5%. What future value will accumulate in their Roth at the end of this period?
Noma plans to save $4,100 per year for the next 40 years. If she can earn an annual interest rate of 9.9 percent, how much will she have in 40 years? Multiple Choice $1,765,994.52 $1,648,261.55 O $164,000.00 $1,689,212.15
Yoir neighbour would like to set money asideto purchase land in 15 years. Theybwould like to gabe S 500,000 set aside in 15 years, if they make annual payments and can earn 12% interest per year, how much money do they need to invest each year?
Elizabeth and William want to begin saving for their child's college education. They estimate that they will need $119000 in twenty years. If they can earn 5% per annum, how much must be deposited at the end of each of the next twenty years to fund the education? O $9549 $9282 O $3599 O $3897
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Suppose you have a 1-year old son and you want to provide R75 000 in 17 years towards hiscollege education. You currently have R5000 to invest. What interest rate must you earn to havethe R75 000 when you need it?
Help!!!!
Your brother plans to retire in 15 years. He currently has a deposit of $300,000, and think he will need $1,500,000 at retirement. If he can save and deposit $7,000 at the end of each year in the following 15 years, annual rate of interest must he eam to reach his goal? O a. 11.12% O b.8.52% Ос 7.44% O d. 9.00% O e. 10.13% what
Imagine that you are a 65 year old woman and her husband has just retired with a combined retirement nest egg of 1.5 million. If they withdraw $120,000 at the end of each year, how many years will it be before they exhaust their retirement savings. Their retirement saving earns 4% interest. 15 16 17 14 18

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