PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 2, Problem 8FPE
Inflation and interest rates. Jessica Adams is 21 years old and has just graduated from college. In considering the retirement investing options available at her new job, she is thinking about the long-term effects of inflation. Help her by answering the following related questions:
- a. Explain the effect of long-term inflation on meeting retirement financial planning goals.
- b. If long-term inflation is expected to average 4 percent per year and you expect a long-term investment return of 7 percent per year, what is Jessica’s long-term expected real
rate of return (adjusted for inflation)? Be sure to consider the important impact of compounding.
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Lillian Coleman is 21 years old and has just graduated from college. In considering
the retirement investing options available at her new job, she is thinking about the
long-term effects of inflation. Help her by answering the following related
questions:
A. Explain the effect of long-term inflation on meeting retirement financial
planning goals.
B. If long-term inflation is expected to average 4 percent per year and you expect a
long-term investment return of 9 percent per year, what is Lillian's long-term
expected real rate of return (adjusted for inflation)? Be sure to consider the
important impact of compounding.
(Ctrl)-
Lillian Coleman is 21 years old and has just graduated from college. In considering the retirement investing options available at her new job, she is thinking about the long-term effects of inflation. Help her by answering the following related questions:
If long-term inflation is expected to average 4 percent per year and you expect a long-term investment return of 6 percent per year, what is Lillian's long-term expected real rate of return (adjusted for inflation)? Be sure to consider the important impact of compounding.
_____________________%
You are considering a retirement savings. For this you will need to determine following information.
Average starting salary of you major. $73,000
Your annual retirement savings amount. 8% of annual income
Your age when you start working. 23 years old
Your age when you plan to retire. 58
Retirement account investment vehicle. This will determine the growth rate. ? idk what this is... When I retire I want to open a ice cream shop (this might help answer the question)
Create an excel table with your age column, annual contribution, annual account balance.
Re-do the calculation with monthly contribution and find your account balance at your retirement.
Submit excel table with all your information.
Chapter 2 Solutions
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
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