You have just turned 30 years old, completed your MBA, and have accepted your first job. Now you must decide how much money to put into your retirement plan. You are required to specify a fixed percentage of your salary that you want to contribute. Your starting salary is $71,000 per year paid at the end of the year and will grow at the rate of 2.2% per year until you retire. Every dollar in the plan earns 7.2% per year. You cannot make withdrawals until you retire on your sixty-fifth birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65. You estimate that to live comfortably in retirement, you will need $102,000 per year starting at the end of the first year of retirement and ending on your 100th birthday. (Hint: Your first contribution is on your 31st birthday and your last contribution is on your 65th birthday. Your first withdrawal is on your 66th birthday and your last withdrawal is on your 100th birthday.) a) The present value of your retirement income on the day you retire is? b) The present value of your salary is? c) The percentage of your income you need to contribute to your retirement account every year is?
You have just turned 30 years old, completed your MBA, and have accepted your first job. Now you must decide how much money to put into your retirement plan. You are required to specify a fixed percentage of your salary that you want to contribute. Your starting salary is $71,000 per year paid at the end of the year and will grow at the rate of 2.2% per year until you retire. Every dollar in the plan earns 7.2% per year. You cannot make withdrawals until you retire on your sixty-fifth birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65. You estimate that to live comfortably in retirement, you will need $102,000 per year starting at the end of the first year of retirement and ending on your 100th birthday. (Hint: Your first contribution is on your 31st birthday and your last contribution is on your 65th birthday. Your first withdrawal is on your 66th birthday and your last withdrawal is on your 100th birthday.) a) The present value of your retirement income on the day you retire is? b) The present value of your salary is? c) The percentage of your income you need to contribute to your retirement account every year is?
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
Related questions
Question
Please answer fast I will rate for you sure....
Transcribed Image Text:You have just turned 30 years old, completed
your MBA, and have accepted your first job.
Now you must decide how much money to put
into your retirement plan. You are required to
specify a fixed percentage of your salary that
you want to contribute. Your starting salary is
$71,000 per year paid at the end of the year
and will grow at the rate of 2.2% per year until
you retire. Every dollar in the plan earns 7.2%
per year. You cannot make withdrawals until
you retire on your sixty-fifth birthday. After that
point, you can make withdrawals as you see fit.
You decide that you will plan to live to 100 and
work until you turn 65. You estimate that to live
comfortably in retirement, you will need
$102,000 per year starting at the end of the
first year of retirement and ending on your
100th birthday. (Hint: Your first contribution is
on your 31st birthday and your last contribution
is on your 65th birthday. Your first withdrawal
is on your 66th birthday and your last
withdrawal is on your 100th birthday.)
a) The present value of your retirement income
on the day you retire is?
b) The present value of your salary is?
c) The percentage of your income you need to
contribute to your retirement account every
year is?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education