9EM ### Future Value of Retirement ContributionsIn this exercise, we'll explore the future value of a retirement account given a specific contribution and interest rate. Let's assume an initial contribution of $4,400 with an annual return of 13 percent. No additional contributions will be made.#### Scenarios1. **Scenario A - Immediate Contribution**: - **Question**: What will your account be worth when you retire in 29 years if you make the contribution now? - **Instruction**: Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).2. **Scenario B - Delayed Contribution**: - **Question**: What will your account be worth if you wait 10 years before contributing? - **Instruction**: Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).To aid in your calculations, here is a table where you can enter the future values for each scenario:| Scenario | Future Value Calculation ||----------|---------------------------------------------------|| a. | Future value for starting now | | b. | Future value if waiting 10 years |By inputting the figures correctly into the formula for compound interest, you can determine the future value of your retirement account under both scenarios.### Key FormulaThe formula to calculate the future value (FV) is:\[ \text{FV} = PV \times (1 + r)^n \]where:- $ PV $ = Present Value (initial contribution, $4,400)- $ r $ = annual interest rate (13% or 0.13)- $ n $ = number of yearsUse this formula to solve for each scenario, ensuring intermediate calculations are accurate up to several decimal points before rounding the final result to 2 decimal places.Do your calculations and fill in the table with your results!

Given information: Contribution made : $4400 Rate of return : 13% We have to compute the future…

You have just made your first $4,400 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions. What will your account be worth when you retire in 29 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if you wait 10 years before contributing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

You have just made your first $4,400 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions. What will your account be worth when you retire in 29 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if you wait 10 years before contributing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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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Find the future value of a continuous stream Question A 30-year-old places a continuous stream of $6, 000 per year into a retirement account which has a continuously compounding interest rate of 1.2%. What will be the value of this continuous stream when this person retires at age 65? Round your answer to the nearest integer. Do not include a dollar sign or commas in your answer. Provide your answer below: FEEDBACK MORE INSTRUCTION SUBMIT
Question # 3: Suppose that your retirement benefits during your first year of retirement are $50000. Assume that this amount is just enough to meet your cost of living during the first year. However, your cost of living is expected to increase at an annual rate of 5% due to inflation. Suppose you do not expect to receive any cost-of-living adjustment in your retirement pension. Then some of your future cost of living has to come from savings other than retirement pension. If your savings account earns 7% interest a year, how much should you set aside in order to meet this future increase in the cost of living over 25 years?
QUESTION 11 Assume that you contribute $160 per month to a retirement plan for 25 years. Then you are able to increase the contribution to $360 per month for the next 25 years. Given a 7.2 percent interest rate, what is the value of your retirement plan after the 50 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Future value of multiple annuities?
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Give only typing answer with explanation and conclusion To supplement your retirement, you estimate that you need to accumulate $320,000 exactly 40 years from today. You plan to make equal, end-of-year deposits into an account paying 6% annual interest. a. How large must the annual deposits be to create the $320,000 fund by the end of 40 years? b. If you can afford to deposit only $1,740 per year into the account, how much will you have accumulated in 40 years?
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Problem Outline Part A By the end of this year, you will be 35-years old, and you want to plan for your retirement. You wish to retire at the age of 65, and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened your retirement account with a 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate throughout your retirement years. What is the face value, not the actual value, of the bond that you will be investing in? Calculate the monthly payment in your retirement account to be able to achieve the plan mentioned above. How much will your inheritors receive? Problem Outline Part B Suppose you think if you were to retire right now, you would have needed $50,000 each year to supplement your social security and maintain your desired…
8) Special Retirement PlanYou set up a retirement plan where you will invest $20,000 per year in an account with a guaranteed rate of return of ? = 0.05. The plan requires that you start investing immediately at year t=0, and make fifteen (15) additional payments of $20,000 in years t=1, t=2, ..., t=10. You make 11 investments in total. a. What will be the value of this stream of investments in year t=50? b. What is the maximum you can withdraw per year over the twenty (20) year period from t=51, t=52, ..., t=70? You have to withdraw the same amount each year. c. What is the maximum that you can withdraw per year forever if you start to make withdrawals in year t=51. You have to withdraw the same amount each year. 19)
question 10 Assume that you contribute $230 per month to a retirement plan for 20 years. Then you are able to increase the contribution to $460 per month for another 30 years. Given a 7.2 percent interest rate, what is the value of your retirement plan after the 50 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.) FUTURE VALUE OF MULTIPLE ANNUITIES?
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Q4. You have just made your first $5,000 contribution to your individual retirement account. Assuming you earn an annual rate of return of 9.75 percent and make no additional contributions, what will your account be worth when you retire in 45 years?

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