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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You want to make sure that you have $9,000 after 3 years to pay off for a debt. Your salary allows you to save $200 each month, what type of interest you need to ensure that you have enough money?
12.
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? 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?
You are 25 years old and currently earn $100,000 per year. Your wage replacement ratio (WRR) is determined to be 80%. You expect inflation will average 3% for your entire life expectancy. You expect to earn 8% on your investments and retire at age 62, living possibly to age 95. Your Social Security benefit statement indicates your Social Security retirement benefit in today's dollar adjusted for early retirement is $40,000 per year. You will make retirement savings contribution at the end of each month. { Use Excel to calculate Jane's rerirement planning options under the (a) the Pure Annuity Model, (b) the Capital Preservation Model and (c) the Purchasing Power Preservation Model
You are graduating from college at the end of this semester and after reading the The Business of Life box in this chapter, you have decided to invest $4300 at the end of each year into a Roth IRA for the next 41 years. If you earn 8 percent compounded annually on your investment, how much will you have when you retire in 41 years? How much will you have if you wait 10 years before beginning to save and only make payments into your retirement account?
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
You want to have $5 million when you retire in 30 years. You feel that you can save $750 per month until you retire. What APR do you have to earn in order to achieve your goal? Enter your answer as a percentage rounded off to two decimal places. Do not enter % in the answer box.
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.
You have just retired with savings of $10 million. If you expect to live for 60 years and to earn 8% a year on your savings, how much can you afford to spend each year (in $ dollars)? (Assume that you spend the money at the start of each year.) $
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%).
You are currently 25 years old and landed your first job. Your retirement plan will make monthly contributions for $1,000 for the next 40 years. Assume your portfolio puts $600 into the S&P 500 which receives an average 12% annual return and $400 into a bond fund which will give a 8% annual return. If you retire at 65 and plan to live until you’re 90, what can you withdraw monthly assuming a risk-free rate of 4%?

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