Your employer offers a 401(k) plan with a 31% match, and you set a goal of retiring in 29 years with an amount of money which has the same buying power that 1.5 million dollars has today. If the account earns an annual interest rate of 4.2% and the expected annual rate of inflation is 1.7%, how much should you contribute each month?

Your employer offers a 401(k) plan with a 31% match, and you set a goal of retiring in 29 years with an amount of money which has the same buying power that 1.5 million dollars has today. If the account earns an annual interest rate of 4.2% and the expected annual rate of inflation is 1.7%, how much should you contribute each month?

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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Similar questions

Using the "Human Life Value" method, how much life insurance should you purchase if you have 45 years until retirement, an annual income of $65,100 received at the start of each years, and a time value of money of 9%? (Assume 80% income replacement, ignore taxes and inflation.)
Assume that you contribute $300 per month to a retirement plan for 15 years. Then you are able to increase the contribution to $500 per month for the next 25 years. Given a 9.0 percent interest rate, what is the value of your retirement plan after the 40 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Future value of multiple annuities $ 51,158 72
Assume that you contribute $280 per month to a retirement plan for 25 years. Then you are able to increase the contribution to $480 per month for the next 25 years. Given a 7.2 percent interest rate, what is the value of your retirement plan after the 50 years? Note: Do not round intermediate calculations and round your final answer to 2 decimal places.
You plan to place $1,200 per year into a Roth IRA. You expect to earn 6% APR and you will place this amount into the account for 35 years. How much will you have in the account in 35 years? Round to the nearest $1,000.
You plan to fund your individual retirement account, beginning today, with 30 annual deposits of 2,000₺, which you will continue for the next 30 years. If you can earn an annual compound rate of 12% on your deposits, what will be the amount in the account upon your retirement?
You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.
You want to be able to withdraw $25,000 from your account each year for 30 years after you retire. You expect to retire in 20 years. If your account earns 8% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?
Your employer offers a 401(k) plan with a 15% match, and you set a goal of retiring in 35 years with an amount of money which has the same buying power that 1.7 million dollars has today. If the account earns an annual interest rate of 1.2% and the expected annual rate of inflation is 2%, how much should YOU contribute each month to the 401(k)? Round your answer to the nearest dollar.
To supplement your retirement, you estimate that you need to accumulate $290,000 exactly 41 years from today. You plan to make equal, end-of-year deposits into an account paying 8% annual interest. a. How large must the annual deposits be to create the $290,000 fund by the end of 41 years? b. If you can afford to deposit only $800 per year into the account, how much will you have accumulated in 41 years?
Assume that you contribute $390 per month to a retirement plan for 15 years. Then you are able to increase the contribution to $780 per month for another 25 years. Given a 6.0 percent interest rate, what is the value of your retirement plan after the 40 years?
Assume that you contribute $150 per month to a retirement plan for 20 years. Then you can increase the contribution to $258 per month for another 20 years, and finally, $408 per month for the last 10 years. Given a 7 percent interest rate, what is the value of your retirement plan after the 50 years?
Suppose you want to have $600,000 for retirement in 25 years. Your account earns 10% interest. How much would you need to deposit in the account each month?

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