You have just turned 30 years old, have just received your MBA, and have accepted your first job. Now you must decide how much mone plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your sixty-fifth birtho 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 $100,000 per year starting at the end of the first year of retirement and ending on your 100th birthday. You will contribute the same am that you work. Required:

You have just turned 30 years old, have just received your MBA, and have accepted your first job. Now you must decide how much mone plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your sixty-fifth birtho 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 $100,000 per year starting at the end of the first year of retirement and ending on your 100th birthday. You will contribute the same am that you work. Required:

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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Shelly Franks is planning for her retirement, so she is setting up a payout annuity with her bank. She is now 35 years old, and she will retire when she is 65. She wants to receive annual payouts for twenty years, and she wants those payouts to receive an annual COLA of 4%. (a) She wants her first payout to have the same purchasing power as does $15,000 today. How big should that payout be if she assumes inflation of 4% per year? $ 48605.96 (b) How much money must she deposit when she is 65 if her money earns 8.3% interest per year? $ (c) How large a monthly payment must she make if she saves for her payout annuity with an ordinary annuity? (The two annuities pay the same interest rate.) $ (d) How large a monthly payment would she make if she waits until she is 40 before starting her ordinary annuity? %$4
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?
Suppose that, at age 30, you might wish to leave your job and pursue a master’s degree. If you choose to remain at your job, your employer would pay you $74k per year until retirement, at age 55. If you go back to the university, you would have to sacrifice 2 years of income, but once you graduate, you would receive $117k per year until you retire at age 55. The master’s program you are interested in costs $22k per year. Note: The term “k” is used to represent thousands (× $1,000). Required: At an opportunity cost of 8%, determine the percentage difference between your most and least profitable alternatives, with the least profitable option as the basis for your calculation.Answer% Intermediate calculations must be rounded to 3 decimal places (at least). Input your answer as a percent rounded to 2 decimal places (for example: 28.31%).
After you graduate, you want to start saving for a down payment on a house which you plan to buy 5 years from now. The company that hired you gave you a $1,703 sign on bonus now that you will put towards the house. You plan to save $222 per paycheck also to put towards the house in years 1-5. You get paid biweekly which means there are 26 paychecks per year. If the account where the money will be deposited achieves 9%, how much will you have as a down payment in year 5? Enter your answer to the nearest dollar.
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A young engineer wants to retire at 60. They want to have $50,000 a year to augment social security. They want this to last 20 years. If they invest their money starting at age 20 at 4% annual interest, how much must they save per month to accomplish their retirement goal?
Your new Job offers a savings plan that pays 1.00 percent in interest each month. You can't participate in the plan, however, until you have 5 years with the company. At that time you will start saving $850 a month for the next 20 years. How much will you have in this savings account in 25 years? Round your answer to two decimals. $1 Another perk of your new job is that, after 5 years with the company, you will also get an increase of $50 in your monthly salary. Assume you would stay with the company for 20 more years after getting the salary increase, and that you discount at 1.00 percent each month. What is this salary increase worth to you today? Round your answer to two decimals.
Your new job offers a savings plan that pays 0.75 percent in interest each month. You can't participate in the plan, however, until you have 5 years with the company. At that time you will start saving $100 a month for the next 28 years. How much will you have in this savings account in 33 years? Round your answer to two decimals. $ Another perk of your new job is that, after 5 years with the company, you will also get an increase of $125 in your monthly salary. Assume you would stay with the company for 28 more years after getting the salary increase, and that you discount at 0.75 percent each month. What is this salary increase worth to you today? Round your answer to two decimals.
You plan to establish a college education fund for your child. The current cost of college is $12,000 per year and you expect this to increase by 5% per year. You plan to deposit money into an account earning 10% per year at the end of each of the next 18 years. You will withdraw the amount required for college at the end of years 18-22. You want the deposit to be low initially and grow by the rate of your salary increase, which you estimate to be 3.5%. What will be the first deposit?How much will be in the account after 8 years?
You are just starting your first job out of college. You and your best friend are competing to see who will have more in their savings when you retire; you both plan to retire at age 52, just 30 years out. You will need $5 million to retire. If you average an annual return of 7% on your investment, how much do you need to put into retirement savings on an annual basis?

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