You are making plans for your retirement. You have just turned 30 and want to retire on your 65th birthday. Once retired, you plan to move to a tax-free Caribbean state, where you believe you can live comfortably on $10,000 per month. Your first payment of $10,000 will occur one month after you retire, and you will receive your last instalment from your retirement fund on your 85th birthday when you intend to move back to Canada and depend on your kids for support. Your current salary is $60,000 per year, or $5,000 per month. Your personal tax rate is approximately 25%. You estimate that you can earn an average return of 10% APR compounded monthly on any money you invest over the next 60 years. You will make your first deposit one month from now and your last deposit on your 65th birthday. To ensure that you are able to achieve your retirement objective, what percentage of your after-tax monthly. income must you save? Select one: a. 4.52% of after tax monthly income b. 5.46% of after tax monthly income c. 6.21% of after tax monthly income O d. 7.28% of after tax monthly income 8.52% of after tax monthly income e.

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
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You are making plans for your retirement. You have just turned 30 and want to retire on your
65th birthday. Once retired, you plan to move to a tax-free Caribbean state, where you believe
you can live comfortably on $10,000 per month. Your first payment of $10,000 will occur one
month after you retire, and you will receive your last instalment from your retirement fund on
your 85th birthday when you intend to move back to Canada and depend on your kids for
support.
Your current salary is $60,000 per year, or $5,000 per month. Your personal tax rate is
approximately 25%. You estimate that you can earn an average return of 10% APR
compounded monthly on any money you invest over the next 60 years. You will make your first
deposit one month from now and your last deposit on your 65th birthday. To ensure that you
are able to achieve your retirement objective, what percentage of your after-tax monthly.
income must you save?
Select one:
a. 4.52% of after tax monthly income
b.
5.46% of after tax monthly income
c.
6.21% of after tax monthly income
O d. 7.28% of after tax monthly income
8.52% of after tax monthly income
e.
Transcribed Image Text:You are making plans for your retirement. You have just turned 30 and want to retire on your 65th birthday. Once retired, you plan to move to a tax-free Caribbean state, where you believe you can live comfortably on $10,000 per month. Your first payment of $10,000 will occur one month after you retire, and you will receive your last instalment from your retirement fund on your 85th birthday when you intend to move back to Canada and depend on your kids for support. Your current salary is $60,000 per year, or $5,000 per month. Your personal tax rate is approximately 25%. You estimate that you can earn an average return of 10% APR compounded monthly on any money you invest over the next 60 years. You will make your first deposit one month from now and your last deposit on your 65th birthday. To ensure that you are able to achieve your retirement objective, what percentage of your after-tax monthly. income must you save? Select one: a. 4.52% of after tax monthly income b. 5.46% of after tax monthly income c. 6.21% of after tax monthly income O d. 7.28% of after tax monthly income 8.52% of after tax monthly income e.
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