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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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 = $
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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 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?
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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