You have just turned 22 years old, have just received your bachelor's degree, and have accepted your first job. Nowyou must decide how much money to put into your registered retirement savings plan (RRSP). The RRSP works asfollows: Every dollar in the RRSP earns 6.7% per year. You cannot make withdrawals until you retire on your 65thbirthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and workuntil you turn 65. You estimate that to live comfortably in retirement, you will need $95,000 per year, starting at the endof the first year of retirement (i.e., when you turn 66) and ending on your 100th birthday. Your first contribution to yourRRSP will be when you turn 23; you will increase your contributions by 4% per year (your expectation for salaryincreases); and you will make these contributions at the end of every year that you work. How much do you need tocontribute on your 23rd birthday to begin funding your retirement?

An RRSP refers to the retirement saving plan that is established by an individual and in which the…

Answered: You have just turned 22 years old, have…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are saving for retirement. To live comfortably, you decide you will need to save $2,500,000 by the time you are 65. Today is your 32nd 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 $ 2,500,000 in the account on your 65th birthday? The amount to deposit each year must be $
You are saving for retirement. To live comfortably, you decide you will need to save $4 million by the time you are 65. Today is your 34th 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 3%, how much must you set aside each year to make sure that you will have $4 million in the account on your 65th birthday? The amount to deposit each year is $(Round to the nearest dollar.)
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 22nd 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 8%, how much must you set aside each year to make sure that you will have $3 Million in the account on your 65th birthday? The amount to deposit each year is _________ (Round to the nearest dollar.)
Suppose that you start working for a company at age 25. You are offered two rather unlikely, but quite enticing, retirement plans from which you are allowed to choose one. [Round all answers to the nearest dollar.] Retirement plan 1: When you retire, you will receive $16,000 for each year of service. Retirement plan 2: When you start work, the company deposits $2500 into a savings account that is guaranteed to pay a yearly rate of 16%. When you retire, the account will be closed and the balance given to you. A. Determine the amount you would receive under plan 1, if you retired at age 55. $ B. Determine the amount you would receive under plan 1, if you retired at age 65. C. Determine the amount you would receive under plan 2, if you retired at age 55. D. Determine the amount you would receive under plan 2, if you retired at age 65.
Researching retirement savings online, you found an article from NewRetirement.com with recommendations from financial guru, Dave Ramsey and others. Dave Ramsey recommends investing 15% of every paycheck into a Roth IRA and pre-tax retirement accounts. If your household earns $75,000 annually and you adhere to Ramsey's recommendation, how much will your retirement account be worth if your 15% ordinary annuity earns 9% annually for 30 years? (Use Table 13.1) Note: Do not round intermediate calculations. Round your answer to the nearest dollar. Answer is complete but not entirely correct. $ 1,533,460 Worth of retirement account,
You are saving for retirement. To live comfortably, you decide you will need to save $1 million by the time you are 65. Today is your 22nd 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 4%, how much must you set aside each year to make sure that you will have $1 million in the account on your 65th birthday?
This is a classic retirement problem. A friend is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retire- ment spending goals: Years until retirement: Amount to withdraw each year: Years to withdraw in retirement: Interest rate: 30 $90,000 20 8% Because your friend is planning ahead, the first withdrawal will not take place until one year after she retires. She wants to make equal annual deposits into her account for her retirement fund. a. If she starts making these deposits in one year and makes her last deposit on the day she retires, what amount must she deposit annually to be able to make the desired withdrawals at retirement?
You are trying to calculate how much money you should have at retirement. On your 60th birthday you will retire and immediately make your first withdrawal of $4,482.06. You plan to make 24 such withdrawals each year. You plan to continue withdrawing at that level and frequency until you are 90 years old. (Assume beginning of period withdrawals with the first withdrawal on your retirement date and no withdrawal on your final birthday.) During retirement your savings will earn only 3.5% per annum. How much do you have to have saved at retirement to fund these planned withdrawals?
You are 30 years old today. You want to retire at the age of 55. You expect to live until age 90. You would like to have a monthly income of $9,000 per month in retirement. How much do you have to save per month during your working years in order to achieve your retirement goal? Assume end of period payments. Assume an annual interest rate of 3.5% in retirement and 5% during your working life. How much do you have to save per month during your working years in order to achieve your retirement goal? $ (Round to the nearest cent.)
You want to open a savings plan for your future retirement. You are considering two options as follows: Option 1: You deposit Php 1,000 at the end of each quarter for the first 10 years. At the end of 10 years, you make no further deposits, but you leave the amount accumulated at the end of 10 years for the next 15 years. Option 2: You do nothing for the first 10 years. Then you deposit Php 6,000 at the end of each year for the next 15 years. Compare the amount accumulated in Option 1 and Option 2. If your deposits or investments earn on interest rate of 6% compounded quarterly, and you chose Option 2 over Option 1, At the end of 25 years from now, I will accumulate what amount of money?
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 33rd 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 3%, how much must you set aside each year to make sure that you will have $3 million in the account on your 65th birthday? The amount to deposit each year is $ (Round to the nearest dollar.)
You currently have a balance of $200,000 in your retirement account. You expect to contribute $7,50o to your retirement account at the end of each year for the next 30 years and your employer will match your contributions; thus, the annual end- of-year contributions to your retirement account will be $15,000. If you earn 8% on your retirement account, how much money will you have in your account when you retire in 30 years? You have a 4-year-old daughter and want to have $120,000 in her college fund when she starts college. You expect to earn a 7% return on her college-fund investments. If you want to make 14 equal-sized end-of-year deposits into your daughter's college fund, how much do you need to deposit each year to have $120,000 when she starts college? $ %24 %24

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