You are 20 years old today. You want to retire at age 50 and have $4 million at that time. Assume you can earn an average annual rate of return of 9.25 percent. Your hope is that you will win the lottery today and be able to fund your retirement dream with one lump sum deposit today. How much would you have to win, after taxes, to make an investment today sufficient to fund your dream? i) $281,459.96 ii) $1,307,468.24 Oiii) $879.004.11 iv) $180.414.07 D
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- Use Excel to solve the following problem. Assume that you are 39 years old planning for your future retirement at age 65. You think that you will be comfortable living on the proceeds from a $1,000,000 401K Retirement Account.a. If your investments grow at an average rate of 6% annually how much must you invest monthly to achieve your projected retirement fund total by the time you retire in 26 years?b. Assuming that when you do retire, you will re-direct your $1,000,000 investment portfolio into less volatile and more secure mutual funds. You expect that, invested in these sources, your portfolio will securely earn 4.5% annually. Based on your assumptions and the normal life expectancy of an American male or female (I determined this to be 81 years old), without consuming any of your principal, how much money will you have on a monthly basis to support your life?(I have worked this problem out on my own, I just want to be sure I applied the formulas and concepts correctly.)13. You have just made your first $4,000 contribution to your retirement account. Assuming you earn an 11 percent rate of return and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? (Does this suggest an investment strategy?). 14. You are saving up for a down payment on a house. You will deposit $600 a month for the next 24 months in a money market fund. How much will you have for your down payment in 24 months if the fund earns 12% APR compounded monthly?Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $160,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment? O 2.28% O 2.20% O 2.22% 2.33% 2.59%
- You are trying to decide how much to save for retirement. Assume you plan to save $6,000 per year with the first investment made one year from now. You think you can earn 6% per year on your investments and you plan to retire in 43 years, immediately after making your last $6,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $6,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be? c. If you hope to live for 18 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 18th withdrawal (assume your savings will continue to earn 6% in retirement)? d. If, instead, you decide to withdraw $100,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take…You are trying to decide how much to save for retirement. Assume you plan to save $4,500 per year with the first investment made one year from now. You think you can earn 6.0% per year on your investments and you plan to retire in 45 years, immediately after making your last $4,500 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $4,500 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be? c. If you hope to live for 16 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 16th withdrawal (assume your savings will continue to earn 6.0% in retirement)? d. If, instead, you decide to withdraw $191,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it…You have discussed your retirement plans with your significant other and plan to move to a state with a lower cost of living upon retirement. You plan on living off $110,000 annually. You understand that your retirement account will likely yield a 5% return. Using the 4% Rule, how much money do you need in your retirement account upon retirement?(round to the nearest dollar){DO NOT INCLUDE COMMAS OR $}
- K You are saving for retirement. To live comfortably, you decide you will need to save $3 million by the time you are 65. Today is your 20th birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into a savings account. If the interest rate is 7%, how much must you set aside each year to make sure that you will have $3 million in the account on your 65th birthday? www The amount to deposit each year is $. (Round to the nearest dollar.)You plan to retire after working for 45 years. You estimate you need 4 million to retire and live comfortably. Assume time zero is today and you will retire at the end of 45 years. Other opportunities exist to invest available capital elsewhere and earn a nominal 12% interest rate each year compounded annually. (A) What amount would you need to invest today (time zero) to fully fund your retirement of 4 million at the end of year 45? (B) What amount would you need to invest each year, including today (Year 0 through 45), to fully fund your retirement goal?Now consider your financial objective is to save $500,000 for preparing your retirement, assuming 30 years from now. If you invest your RRSP savings in a mutual fund which can realize an average return of 10% per year. To achieve your goal, how much do you need to save at the end of each year over the 30-year period? a. 4,039.26 b. 3,039.62 c. 2,985.54 d. 10,988.32 What is the FV of $100 deposited today into an account with an APR 12.6%, compounded semiannually for 10 years? a. 1478.96 b. 3460.06 c. 327.63 d. 339.36 A car dealer offers payment of $525.32 per months for 60 months on a $30,000 car after making a $5000 down payment. What's the loan's APR? a. 10.4798% b. 9.5224% c. 1.9609% d. 0.7935%
- You are saving for retirement. To live comfortably, you decide that you will need $2.5 million by the time you are 65. Today is your 30th birthday, and you decide, starting today, and on every birthday up to and including your 65th birthday, that you will deposit the same amount into your savings account. Assuming the interest rate is 5%, the amount that you must set aside each year on your birthday is closest to: O $71,430. O $26,260. O $26,100. O $27,680.? You would like to have enough money saved to receive a $53,000 per year perpetuity after retirement. How much would you need to have saved in your retirement fund to achieve this goal? Assume that the perpetuity payments start on the day of your retirement. The annual interest rate is 8 percent. O -00 Multiple Choice $715,500 $1,060,000 $530,000After retirement, you expect to live for 25 years. You would like to have $91,000 in income each year. How much should you have saved in your retirement account to receive this income if the annual interest rate is 9 percent per year? (Assume that the payments start one year after your retirement) Multiple Choice $1,472.33173 $893,85474 $2,275,000.00 $101,089.74
