You want to have $5 million when you retire in 40 years. You believe you can earn 9 percent per year on your investment. How much must you invest each year to achieve your goal when you retire? (Ignore all taxes.) Multiple Choice O $10,412 $11,619 $14,798 $15,295 None of these choices are correct

You want to have $5 million when you retire in 40 years. You believe you can earn 9 percent per year on your investment. How much must you invest each year to achieve your goal when you retire? (Ignore all taxes.) Multiple Choice O $10,412 $11,619 $14,798 $15,295 None of these choices are correct

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

See similar textbooks

Related questions

Q: Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 8% per year on his…

A: Future value (FV) is a fundamental financial concept rooted in the time value of money, illustrating…

Q: You are 20 years old today. You want to retire at age 50 and have $4 million at that time. Assume…

A: The present value of money refers to the concept that money available in the future is worth less…

Q: Earl Ezekiel wants to retire in San Diego when he is 65 years old. Earl is now 50. He believes he…

A: We need to use present value formula below to calculate investment today PV =FV/(1+r)n Where PV…

Q: Marcy is 45 years old. Her portfolio for retirement is currently valued at $260,000, and she saves…

A: The FV of an investment refers to the combined worth of the cash flows of the investment at a given…

Q: Your client is 45 years old, and she wants to begin saving for retirement, with the first payment to…

A: Time = t = 65 - 45 = 20Payment = p = $6000Interest rate = r = 11%

Q: Your sister just deposited $6,500 into an investment account. She believes that she will earn an…

A: The objective of the question is to find out how much more you need to deposit today in order to…

Q: Assume the total cost of a college education will be $300,000 when your child enters college in 18…

A: Future Value = Present Value * ( 1 + Interest rate)time period

Q: Assume your goal in life is to retire with four million dollars. How much would you need to save at…

A: The amount needed to save annually can be calculated with the help of future value of annuity

Q: Finding the required interest rate Your parents will retire in 29 years. They currently have…

A: Given: Current worth = $400,000 Future value = $1,100,000 Years = 29

Q: Peter wants to retire in 40 years and to have $3 million. He feels that he can save $688 per month…

A: The concept of time value of money will be applied here. As per the concept of time value of money…

Q: You have just inherited $560,000. You plan to save this money and continue to live off the money…

A: Present Value = pv = $560,000Interest Rate = r = 5.46%Future Value = fv = $1 million

Q: You expect to inherit 75,000 dollars 8 years from now. If r = 2 percent, find the PV. Group of…

A: Hi studentSince there are multiple questions, we will answer only first question.Time value of money…

Q: I understand the awnser to this question is B but can you explain in detail why it is B. You inherit…

A: Today money=$300000Interest rate=r=7%Period=20 yearsHow can withdraw annually.

Q: You want to have $3.15 million when you retire in 35 years. You feel that you can save $775 per…

A: The concept of time value of money will be used here. As per the concept of time value of money the…

Q: Suppose you inherited $935,000 and invested it at 8.25% per year. How much could you withdraw at the…

A: Annuity refers to an amount or stream of equal cash flows (CF) paid or received periodically.…

Q: Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25…

A: Annual savings refers to an amount that is saved at a specified rate of interest for the purpose of…

Q: you would like to have enough money saved to receive a $53,000 per year perpetuity after retirement.…

A: Perpetuity refers to something that lasts forever, without an end.It represents an infinite duration…

Q: Connor has $550,000 to invest in a 5 year annuity. Assuming the time value of money is 10%, what…

A: PV = Present Value (in this case, the amount Connor has, which is $550,000)PMT = Annual cash flow…

Q: Your uncle Barry is about to retire, and he wants to buy an annuity that will provide him with…

A: ANNUITY =77000 Period =25 years interest rate =8.5%

Q: Your grandparents just gave you a gift of $3,000. You are investing this money for 10 years at 3…

A: Solution:- In simple interest method, amount of interest earned = Principal amount x Annual interest…

Q: How much do you need to invest today to receive $7,500 in 8 years, if you can earn 3% on your…

A: INFORMATION: RATE 3% YEARS 8 PMT (MONTHLY DEPOSIT) 0 FUTURE VALUE $7,500

Q: If Nicolal earns an 9 percent after-tax rate of return, $6,500 today would be worth how much to…

A: In accounting, future value refers to the value of an asset or investment at a future point in time,…

Q: You have just won the lottery and will receive a lump sum payment of $23.49 million after taxes.…

A: Present value is an estimate of the present value of future cash values that may be received at a…

Q: Your sister just deposited $11,500 into an investment account. She believes that she will earn an…

A: The current worth that would be same as the amount saved by the sister in seven years at 10% can be…

Q: At age 20 you invest $1,000 that earns 7 percent each year. At age 30 you invest $1,000 that earns…

A: Future value = Present value x (1+i)^twherei = interest rate per periodt = total period

Q: Your parents will retire in 26 years. They currently have $360,000 saved, and they think they will…

A: Interest rate refers to the charge that is paid by the borrower to the lender on the amount of…

Q: Willie would like to have $500,000 set aside at retirement. He would like to make annual deposits…

A: Time has been precious in all perspectives, however in terms of finance; the time has a monetary…

Q: Your older sister deposited $100,000 today at 12.5 percent interest for 10 years. You would like to…

A: Solution: An amount deposited somewhere, earns interest on it. The amount deposited in the beginning…

Q: d. You just received an inheritance worth $150,000. You want to retire in 25 years and you plan to…

A: The time value of money is a foundational finance principle that states that the worth of money when…

Q: You would like to provide $113,000 a year forever for your heirs. How much money must you deposit…

A: Any regular periodic payment made till infinity is regarded as a perpetual annuity. The current…

Q: at amoun haron hop e Value o hution

A: 1) We are given, Annual contribution = $10,000 Year = 30 Rate = 7% Future value = ?

Q: Phil Nelson wants to retire when he is 65 years old. Phil is now 45. He believes he will need…

A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type])…

Q: Ben plans on retiring in 50 years. His account pays 5.5% annual interest compounded semi-annually.…

A: given information future value = 100000 interest rate = 5.5% compounded semianually time period = 50…

Q: You would like to give your daughter $75,000 towards her college education 16 years from now. How…

A: The amount to be set aside today is calculated as the present value using following equation Present…

Q: Your friend turned out to be dishonest and was looking to con you out of $4,902,714. After clearing…

A: Future Value of Annuity Due = P * [ (1+r)^n - 1 ] /r * (1+r) Where, P = Monthly Deposit r =rate…

Q: Someone in the 36 percent tax bracket can earn 8 percent annually on her investments in a tax-exempt…

A: Here,One Time Invetsment is $13,000Tax Rate is 36%Interest Rate is 8%

Q: You can retire at age 62 and receive $8,000 per year or retire at age 65 and receive $10,000 per…

A: Choice 1: Annual receipt is $8,000. Discount rate is 2%. Maturity is (70 - 62) 8 years. Choice 2:…

Q: Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25…

A: An annuity is a series of payments that are all the same size and are made at regular intervals over…

Q: 1. Jose Garcia's life long dream is to own a fishing boat to use in his retirement. Jose has…

A: In the above-given problem, we are asked to calculate the present value of the investment of…

Q: You just received a $5,000 gift from your grandmother which you have decided to save and then gift…

A: Future value refers to the future value of the cash flow. It is the value of the cash flow…

Q: Your parents will retire in 16 years. They currently have $400,000 saved, and they think they will…

Q: You want to have $10,500 saved 8 years from now. How much less can you deposit today to reach this…

A: A = whereA = Amount to be deposited todayFV = future valuer = interest raten = time period

Q: How much do you have to save each year from your 51st to your 60th birthday in order to achieve your…

A: The time value of money recognizes the idea that the value of an amount of money today differs from…

Q: Ishan plans to retire at age 40 with a decent lifestyle. He assumes that he can safely earn a real…

A: The current worth of the amount that should be accumulated at the age of 40 can be found by using…

Question

6
You want to have $5 million when you retire in 40 years. You believe you can earn 9 percent per year on your investment. How
much must you invest each year to achieve your goal when you retire? (Ignore all taxes.)
H
Multiple Choice
O
O
E
$10,412
D
$11,619
$14,798
$15,295
Q Search
None of these choices are correct
$
C
4
R
F
%
5
V
T
< Prev
6
4+
4 of 18 #
>
B
&
7
H
Next >
с
8
N
J
to Dil
K
Save & Exit Submit
M
O
ENG

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!

SEE SOLUTION Check out a sample Q&A here

Step 1: Explain the future value

VIEW

Step 2: Calculate the Annual Investment

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

18. Calculating Future Values You have just made your first $5,000 contribution to your individual retirement account. Assuming you earn an annual rate of return of 10.2 percent and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? (Does this suggest an investment strategy?) LO 1
Your parents will retire in 20 years and currently have $108,000 saved in a retirement account. They think they will be okay with $700,000 at retirement since your mom also has a pension and they should both get some money from Social Security. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? 7.02% 8.36% 8.97% 9.80% 10.31%.
Your older sister deposited $50,000 today at 14 percent interest for 12 years. You would like to have just as much money at the end of the next 12 years as your sister will have. However, you can only earn 12 percent interest. How much more money must you deposit today than your sister did if you are to have the same amount at the end of the 12 years? Question 15 options: 9,863 10,458 7,120 8,321 11,832
You have just made your first $4,500 contribution to your individual retirement account. Assume you earn an annual return of 10.85 percent and make no additional contributions. a. What will your account be worth when you retire in 43 years? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What if you wait 10 years before contributing? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Account value if you start now b. Account value if you wait 10 years
Your uncle wants to retire in 30 years, and he wants to have an annuity of $1000 a year for 20 years after retirement. He wants to receive the first annuity payment at the end of the 30th year. Using an interest rate of 10%, how much must he invest as a lump sum today in order to have his retirement annuity (round to nearest $10). Multiple Choice O $500 $490 $540 $570 none of the above x
Alec, Daniel, William, and Stephen decide today to save for retirement. Each person wants to retire by age 65 and puts $11,000 into an account earning 10% compounded annually. Person Age Initial Investment Accumulated Investmentby Retirement (age 65) Alec Daniel William Stephen 55 45 35 25 $11,000 11,000 11,000 11,000 $_________________ $_________________ $_________________ $_________________ Required:Calculate how much each person will have accumulated by the age of 65.
Earl Ezekiel wants to retire in San Diego when he is 65 years old. Earl is now 49. He believes he will need $470,000 to retire comfortably. To date, Earl has set aside no retirement money. Assume Earl gets 10% interest compounded semiannually. How much must Earl invest today to meet his $470,000 goal? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Investment
45. Retirement Savings. A couple thinking about retirement decide to put aside $3,000 each year in a savings plan that earns 8% interest. In 5 years they will receive a gift of $10,000 that also can be invested. (LO5-3) a. How much money will they have accumulated 30 years from now? b. If their goal is to retire with $800,000 of savings, how much extra do they need to save every year?
Assume you are 25 and earn $29 comma 00029,000 per year, never expect to receive a raise, and plan to retire at age 55. If you invest 5 percent of your salary in a 401(k) plan returning 1111 percent annually, and the company provides a $0.50 per $1.00 match on your contributions up to 3 percent of salary, what is the estimated future value of your 401(k) account? Once you retire, how much can you withdraw monthly if you want to deplete your account over 3030 years?
You have just made your first $5686 contribution to your retirement account. Assume you earn a return of 11.5 percent per year and make no additional contributions. What will your account be worth when you retire in 45 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
30 Connor has $480,000 to invest in a 5-year annuity. Assuming the time value of money is 10%, what amount will Connor receive in cash each year? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your PV factors. Round your answer to the nearest dollar. Multiple Choice $96.000 $103,680 $126,623 None of these answers are correct

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

SEE MORE TEXTBOOKS