FUTURE VALUE OF AN ANNUITY Your client is 40 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average retum of 9% in the future. 5-19 a. If she follows your advice, how much money will she have at 65? b. How much will she have at 70? c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to eam the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age?:

FUTURE VALUE OF AN ANNUITY Your client is 40 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average retum of 9% in the future. 5-19 a. If she follows your advice, how much money will she have at 65? b. How much will she have at 70? c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to eam the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age?:

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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Many assets provide a series of cash inflows over time; and many obligations require a series of payments. When the payments are equal and are made at fixed intervals, the series is an annuity. There are three types of annuities: (1) Ordinary (deferred) annuity, (2) Annuity due, and (3) Growing annuity. One can find a annuity's future and present values, the interest rate built into annuity contracts, and the length of time it takes to reach a financial goal using an annuity. Growing annuities are often used in the area of financial planning. Their analysis is more complex and often easier solved using a financial spreadsheet, so we will limit our discussion here to the first two types of annuities. The future value of an ordinary annuity, FVAN, is the total amount one would have at the end of the annuity period if each payment (PMT) were invested at a given interest rate and held to the end of the annuity period. The equation is: Each payment of an annuity due is compounded for one…
Creating a retirement fund Personal Finance Problem To supplement your retirement, you estimate that you need to accumulate $220,000 exactly 45 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 $220,000 fund by the end of 45 years? b. If you can afford to deposit only $440 per year into the account, how much will you have accumulated in 45 years? (---) a. The annual deposits to create the $220,000 fund by the end of 45 years should be $. (Round to the nearest cent.)
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $97,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 5.45%. How much would it cost him to buy the annuity today? a. $1,192,059.14 b. $1,164,011.03 c. $1,195,837.87 d. $1,261,011.03 e. $1,227,449.63
1. Pensions Meg's pension plan is an annuity with a guaranteed return of 7% per year (compounded quarterly). She would like to retire with a pension of $20,000 per quarter for 25 years. If she works 41 years before retiring, how much money must she and her employer deposit each quarter? (Round your answer to the nearest cent.) 2. You want to buy a 5 year bond with a maturity value of $8,000, and you wish to get a return of 5.5% annually. How much (in dollars) will you pay? (round to nearest cent) 3. Calculate, to the nearest cent, the future value FV (in dollars) of an investment of $10,000 at the stated intrest rate after stated amount of time. 12.9% per year, compounded monthly, after 9 years FV=$ 4.Jennifer's pension plan is an annuity with a guaranteed return of 7% per year (compounded monthly). She can afford to put $300 per month into the fund, and she will work for 35 years before retiring. If her pension is then paid out monthly based on a 25 year payout, how much will she…
Your client is 32 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $7,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future. a. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much will she have at 70? Do not round intermediate calculations, Round your answer to the nearest cent. 2$ c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $
You want to save money for retirement. Your savings pattern is as follows: First 5 years: You save $2200 each year Next 14 years: In the óth year, you save $2100 and decrease your savings by $100 in each following year. How much money will you have when you retire at the end of 19 years, if the interest rate is 7% per year?
Assume that Social Security promises you $43,000 per year starting when you retire 45 years from today (the first $43,000 will get paid 45 years from now). If your discount rate is 5%, compounded annually, and you plan to live for 17 years after retiring (so that you will receive a total of 18 payments including the first one), what is the value today of Social Security's promise? ... The value today of Social Security's promise is $ the nearest cent.) (Round to
Your client is 40 years old; and she wants to begin saving for her retirement, with the firs payment to come one year from now. She can save Rs. 5000 per year and you advise her to invest it in the stock market., which expect to provide average return of 9% in the future.a) If she follows your advice, how much money she will have at the age of 65?b) How much she will have at the age of 70?c) She expects to live for 20 years if she retires at 65 and for 15 years if she retires at the age of 70. If her investment continues to earn the same rate of return, how much will she be able to withdraw at the end of each year after retirement at each retirement age?
Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 11.4 percent. How much money will Robert have at the end of seven years? Could you please show the formula that would be used if using excel is for either FV or however it is set up. Thanks
You plan to invest $12,000 per year into a retirement account. If you earn a compound annual rate of return of 11%, how many years will it take you to reach a balance of $1,500,000? Question 2 options: 22.83 25.79 24.24 21.09 26.76
How much would Sally be willing to pay today for an annuity expected to pay $4,000 per year for 5 year, with the first payment starting in 3 years. Assuming she requires a 10% return?
Mr. Z is about to retire, and he wants to buy an annuity that will provide him with $57,000 of income per year for 20 years, with the first paying coming immediately and future payments occurring at the BEGINNING of the respective years. The interest rate on this annuity is 8.50%. How much would it cost him to buy the annuity today? Group of answer choices $539,410.19 $538,439.25 $585,260.05 $655,491.26 $561,849.65

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