You are preparing for your retirement and have decided to begin saving early. Based on your research, you'vedetermined that you will require $3,000 per month to cover your living expenses during retirement. a. How muchmoney do you need when you retire if you place all of it in a compound interest account that earns 7% compoundedmonthly, and is living off the interest only? (What is the required retirement savings amount that can generate yourmonthly living expenses as interest income?)

The idea of funding retirement expenses with a compound interest account is at the center of the…

Answered: You are preparing for your retirement…

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

You want to be able to withdraw $40,000 from your account each year for 25 years after you retire. If you expect to retire in 15 years and your account earns 6.6% interest while saving for retirement and 6.2% interest while retired:Round your answers to the nearest cent as needed.a) How much will you need to have when you retire?$b) How much will you need to deposit each month until retirement to achieve your retirement goals?$c) How much did you deposit into you retirement account?$d) How much did you receive in payments during retirement?$e) How much of the money you received was interest?$
Suppose you have estimated that you will need $2,500 per month in your retirement to meet your expenses and live comfortably, and that you have found or chosen a fund (account) which pays monthly interest 4% APR . What principal, or balance, will your account need to maintain in order to be able to pay you this amount each month? Round/take your answer to the nearest cent.
using excel: How much money must you invest today in order to withdraw the following monthly payments in retirement, $1,000 per month from Year 1 through Year 5, $750 per month from Year 6 through 10? Assume you can earn a rate of return of 8.60%.
Suppose you want to have $400,000 for retirement in 25 years. Your account earns 5% interest. Feel free to use the Online Basic Financial Calculator a) How much would you need to deposit in the account each month? es b) How much interest will you earn? $
(Use Calulator or Formula Approach) You want to receive $5,000 per month in retirement. If you can earn 0.75% per month and you expect to need the income for 25 years, how much do you need to have in your account at retirement?
We are considering the effects of starting early or late to save for retirement. Assume that each account considered has an APR of 6% compounded monthly. Following expert advice, you begin your retirement program as soon as you graduate from college at age 32. You plan to retire at the age of 65. What monthly contributions do you need to make to have a retirement account worth $1,000,000? (Round your answer to the nearest cent.) $ What will your total personal contribution be by the time you retire if you start saving after graduation? $ Against expert advice, you begin your retirement program at age 49. You plan to retire at the age of 65. What monthly contributions do you need to make to have a retirement account worth $1,000,000? (Round your answer to the nearest cent.) $ What will your total personal contribution be by the time you retire if you start saving at age 49? $ How much more will you personally contribute by the time you retire if you start saving at age 49…
Choose the appropriate formula type for answering the following question: Suppose you want to have $410,500 for retirement in 15 years. Your account earns 6.5% interest. How much would you need to deposit in the account each month? Annuity Compound Interest Loan/Payout Annuity
You estimate you need to supplement your social security payments with monthly withdrawals of $1,400.00 per month from a private investment account during the first 23 years of your retirement. Assuming you can earn annual returns of 5.2% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
You want to retire with at least $1,500,000 in the bank and figure you will continue working for another 40 years. After all of your expenses you can only afford to save $250 a month. What is the lowest interest rate you will need to earn to ensure you meet your retirement goal?
You began saving for retirement at age 25 by contributing $550 per month at an APR of 6% compounded monthly. You plan to retire at the age of 65 and live on your retirement nest egg. 1) How much money is in your account on retirement age at 65? 2) What is the total amount of your deposits over 40 years? 3) Compare that amount of money in your account to the total deposits made over the time period. Explain your observation as a percentage of your contribution to the total balance. 4) After working 40 years, you decide to retire. Suppose you set up your account as perpetuity on retirement paying an APR of 6% compounded monthly. If the value of your nest egg (that is, the present value) is the amount found in question #1, what will be your yearly income and your monthly income (round both to the nearest dollar)? Monthly perpetuity yield = Nest egg times Monthly interest rate
You decide to replace your income of $70,000 a year in retirement for 30 years. How much do you need in your retirement account the day you retire to make that happen, assuming a real interest rate of 3%?
Suppose you want to have $800,000 for retirement in 25 years. Your account earns 7% interest.a) How much would you need to deposit in the account each month?$b) How much interest will you earn?$

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