You will retire in 44 years. At that time you will begin making annualwithdrawals and the first withdrawal will need to have the purchasingpower that $118,903 has today. You will withdraw the same amount ofmoney each year of retirement (and you recognize that its purchasingpower will fall as inflation continues). You plan to live for 21 years duringretirement, necessitating 21 withdrawals. Inflation equals 6% per year.Obviously, you will need to save (and invest) money to generate the nestegg that will be spent during retirement. The "fund" you plan to invest inearns 10% per year until retirement, and then during retirement it earns2% per year. How much must you save each year (with payments intoyour retirement savings vehicle beginning one year from today), in ordertconpot you Getirement needs?Rathod Kishan

To solve this problem, we need to calculate the amount you must save annually to meet your…

Answered: You will retire in 44 years. At that…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 44P

See similar textbooks

Similar questions

You are saving for your retirement. You have decided that one year from today you will deposit 5percent of your annual salary in an account which will earn 6percent per year. Your salary currently (today) is $90,000, and it will increase at 2 percent per year throughout your career. How much money will you have for your retirement, which will begin in 40years? Assume your first payment into the account is one year from today after your first increase.In other words, your next year’s paycheck (Year 1) is more than $90,000since it will increase by 2% each year. (
You have decided that in order to have a comfortable retirement you will need to replace $65,000 in income each year in retirement. Assuming you will need 20 years of retirement income and an inflation rate of 3.5%, how much will you need to have saved up in order to meet your goal on the day you retire?
You plan to retire 35 years from today. In retirement, you will withdraw $200,000 from your retirement account each year for 30 years. You will make the first withdrawal 36 years from today. During your 35-year saving period, you expect to earn a rate of return of 8% compounded monthly. During your 30-year retirement period, you expect to earn a rate of return of 5% compounded annually. How much will you need to deposit at the end of each month, making the first deposit 1 month from now, in order to meet your retirement goal? You should first compute the amount that you will need to in the account when you retire That will provide you with the data to calculate the monthly investment required during your savings years. ANSWER
You hope to retire in 27 years. When you do, you would like to have the purchasing power of $114,071 today, during each year of retirement. Your cash is needed at the beginning of each year of retirement. Inflation is expected to be 3 % per year from now until the end of your retirement. Your retirement will last 21 years. You expect your 401K to earn 9 % per year during your retirement years. How much money do you need at the beginning of your retirement years, to "just meet" your retirement needs? (Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234).
You plan on retiring in exactly 6 years and you would like to have a retirement fund balance of exactly $2,000,000 at that time. You are convinced that you can earn an APR (based on monthly compounding) of 5.1%. If you are making beginning-of-the-month payments into the account, how much does each one of the payments need to be in order to reach your target? To nearest $0.01
To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal annual end-of-year deposits into an account paying 8 percent annual interest.a. How large must the annual deposits be to create the $220,000 fund by the end of 42 years?b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the forty-second year?
To supplement your planned retirement in exactly 30 years, you estimate that you need to accumulate $1 million by the end of 30 years from today. You plan to make equal annual end-of-year deposits into an account paying 4 percent annual interest. a. How large must the annual deposits be to create the $1 million amount by the end of 30 years? b. If you can afford to deposit only $5,000 per year into the account, how much will you have accumulated by the end of the 30 years?
In planning for your retirement, you have decided that you would like to be able to withdraw $60,000 per year for a 10 year period. The first withdrawal will occur 20 years from today. a. What amount must you invest today if your return is 10% per year? b. What amount must you invest today if your return is 15% per year?
You want to start funding your retirement. You plan to do this by making 60 semi-annual deposits of $4,000 beginning today, your 30th birthday. After that you do not plan to save any more. You expect to earn an APR of 10% compounded monthly from now until you retire. You plan to retire on your 70th birthday, and live until you are almost 90 (dying the day before your 90th birthday). Your first monthly withdrawal is on your 70th birthday (and the last withdrawal is the month before you are 90). After retirement you expect to earn an APR of 10%. How much can you with draw each month?
You want to be able to withdraw $40,000.00 from your account each year for 15 years after you retire.You expect to retire in 20 years.If your account earns 5% interest compounded annually, how much will you need to deposit each year until retirement to achieve your retirement goal?You will need to deposit_$_____ each year.
You plan to make annual deposits of $5,000 per year at the beginning of each year into your retirement account. Your goal is to have $800,000 If you expect to get an 8% rate of return, how many years will it take you to reach your goal?
You expect to retire in 25 years. After you retire, you want to be able to withdraw $3000 dollars from your account each month for 30 years. If your account earns 10% interest compounded monthly, how much will you need to deposit each month until retirement to achieve your retirement goals?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

SEE MORE TEXTBOOKS