You have just turned 30 years old, have just received 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 specity a fixed percentage of your salary that you want to contribute. Assume that your starting salary is $75,000 per year and it will grow 2% per year until you retire. Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on yo 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 tum 65. You estimate that to live comfortably in retirement, you will need 5100,000 per y starting at the end of the first year of retirement and ending on your 100th birthday. What percentage of your income do you need to contribute to the plan every year to fund your retirement income? The fraction of your salary that you should save is %. (Round to two decimal placcs.)

You have just turned 30 years old, have just received 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 specity a fixed percentage of your salary that you want to contribute. Assume that your starting salary is $75,000 per year and it will grow 2% per year until you retire. Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on yo 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 tum 65. You estimate that to live comfortably in retirement, you will need 5100,000 per y starting at the end of the first year of retirement and ending on your 100th birthday. What percentage of your income do you need to contribute to the plan every year to fund your retirement income? The fraction of your salary that you should save is %. (Round to two decimal placcs.)

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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You are planning to invest $2,000 in an account earning 12% per year for retirement. a. If you put the $2,000 in an account at age 23, and withdraw it 36 years later, how much will you have? b. If you wait 10 years before making the deposit, so that it stays in the account for only 26 years, how much will you have at the end? a. If you put the $2,000 in an account at age 23, and withdraw it 36 years later, how much will you have? In 36 years you would have $. (Round to the nearest cent.)
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.
Your goal is to retire in 20 years. You plan to start on this path by saving $200 a month. If you earn 6% annually (using monthly compounding), how much will you have saved in 20 years? Right before you started saving, you were notified by your auto insurance company that you will receive a discount of $20 a month on your auto premium because of your impeccable driving record. If you chose to put those savings towards your retirement goal each month, how much would your retirement account be worth if you save $220 a month for 20 years with an annual return of 6% (compounded monthly)? Please discuss your thoughts on the impact of saving an additional $20 a month over 20 years.
Your employer automatically puts 5 percent of your salary into a 401(k) retirement account each year. The account earns 8% interest. Suppose you just got the job, your starting salary is $50000, and you expect to receive a 3% raise each year. For simplicity, assume that interest earned and your raises are given as nominal rates and compound continuously. Find the value of your retirement account after 35 years Value = $
When you take your job, you decide to start saving for your retirement. You put P3k per year into the company’s plan, which averages 18% interest per year. Five years later, you move to another job and start a new plan. You never get around to merging the funds, if the 1st plan continued to earn interest at the rate of 18% per year for 25 years after you stopped making contributions, how much is the account worth?
You want to retire with at least $1,500,000 in the bank and figure you will continue working for another 40 years. After all of your expenses you can only afford to save $250 a month. What is the lowest interest rate you will need to earn to ensure you meet your retirement goal?
You just received $225,000 from an insurance settlement. You have decided to set this money aside and invest it for your retirement. Currently, your goal is to retire 25 years from today. How much more will you have in your account on the day you retire if you can earn an average return of 10.5 percent rather than just 8 percent?
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 want to start saving for retirement by opening an RRSP account. You have no savings yet but that's okay because you are still young. You plan to retire in 30 years. Upon retirement, you would like to be able to spend $120,000 a year for 20 years. You fund this spending by making beginning of month withdrawals that are the same amount (size) every month. The first withdrawal occurs once you begin your retirement in 30 years. The last withdrawal occurs at the beginning of the last month of your retirement horizon. How much do you need to deposit at the end of each month for the next 30 years in order to achieve your retirement objective? Your RRSP account pays 7.7% p.a. compounded semi-annually during both savings and retirement periods.
At 24, you finish college and are fortunate enough to have a job waiting for you. Your first job has a starting salary of $75,000 per year. This salary is expected to increase by $5,000 each year. You decide to start saving for retirement right away. Each year you invest 5% of the year’s salary in an account that earns 10% interest, compounded yearly. For simplicity, assume the deposit is made at the END of each year (so if age 24 is t = 0, then the first deposit will be at age 25). If you continue to save in this manner, how much will be in your retirement account immediately after you make the deposit at age 45?
A 30 year - old person plans to retire at 64 and live until 92. During retirement, the person will take a growing annuity from the retirement account. The amount in the first year will be $90,000 with a 2% growth rate. The return on savings before retirement is 9%, an after retirement is 6%. Initial savings are zero, and the person does not want to leave a legacy at the time of death. How much must the person save per year before retirement to achieve this goal?

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