who are still dependent. He received a $150,000 lump-sum retirement bonus and will receive $2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement plan and another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked your advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per month, considering he has two children and a nonworking spouse. Because he has children, his current monthly expenses total $5,800. He is not eligible for Social Security until age 62, when he will draw approximately S1,200 per month; however, he would rather defer drawing on Social Security until age 67 to increase his monthly benefit amount to $1,550. Questions 1. If the inflation rate averages 3.5 percent đuring Bill's retirement, how old will he be when prices have doubled from current levels? How much will a soda cost when Bill dies if he lives the full 30 vears and the soda costs $1 today?
who are still dependent. He received a $150,000 lump-sum retirement bonus and will receive $2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement plan and another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked your advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per month, considering he has two children and a nonworking spouse. Because he has children, his current monthly expenses total $5,800. He is not eligible for Social Security until age 62, when he will draw approximately S1,200 per month; however, he would rather defer drawing on Social Security until age 67 to increase his monthly benefit amount to $1,550. Questions 1. If the inflation rate averages 3.5 percent đuring Bill's retirement, how old will he be when prices have doubled from current levels? How much will a soda cost when Bill dies if he lives the full 30 vears and the soda costs $1 today?
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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Transcribed Image Text:Mini Case
Bill Petty, 56, just retired after 31 years of teaching. He is a husband and father of two children
who are still dependent. He received a $150,000 lump-sum retirement bonus and will receive
$2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement plan
and another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most of
his other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked your
advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired.
He also wants to know how much
and a nonworking spouse. Because he has children, his current monthly expenses total $5,800. He
is not eligible for Social Security until age 62, when he will draw approximately $1,200 per month;
however, he would rather defer drawing on Social Security until age 67 to increase his monthly
benefit amount to $1,550.
Questions
can withdraw per month, considering he has two children
1. If the inflation rate averages 3.5 percent during Bill's retirement, how old will he be when
prices have doubled from current levels? How much will a soda cost when Bill dies if he lives
the full 30 years and the soda costs $1 today?
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