1. Shanice Johnson, of Philadelphia, Pennsylvania, wants to invest $4,000 annually for her retirement 30 years from now. She has a conservative investment philosophy, and expect to earn a return of 3% in a tax-sheltered account. If she took a more aggressive investment approach and earned a return of 5%, how much more would Shanice accumulate? (Hint: use the ordinary annuity formula, as in find the future value of periodic payments made to an interest-bearing account.) 2. List two or three mistakes that people make when planning for retirement. In your opinion, which one might be the most serious one and why? **PLEASE USE THE FORMULA ***

1. Shanice Johnson, of Philadelphia, Pennsylvania, wants to invest $4,000 annually for her retirement 30 years from now. She has a conservative investment philosophy, and expect to earn a return of 3% in a tax-sheltered account. If she took a more aggressive investment approach and earned a return of 5%, how much more would Shanice accumulate? (Hint: use the ordinary annuity formula, as in find the future value of periodic payments made to an interest-bearing account.) 2. List two or three mistakes that people make when planning for retirement. In your opinion, which one might be the most serious one and why? PLEASE USE THE FORMULA *

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 9FPE

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1. Shanice Johnson, of Philadelphia, Pennsylvania, wants to invest $4,000 annually for her retirement 30 years from now. She has a conservative investment philosophy, and expect to earn a return of 3% in a tax-sheltered account. If she took a more aggressive investment approach and earned a return of 5%, how much more would Shanice accumulate? (Hint: use the ordinary annuity formula, as in find the future value of periodic payments made to an interest-bearing account.) 2. List two or three mistakes that people make when planning for retirement. In your opinion, which one might be the most serious one and why?
2. An brokage house employee is trying to sell you investment instrument, which for a single amount paid today will provide you with $25,000 at the end of each year for the next 19 years and $30,000 at the end of year 20. You currently earn 5% on low-risk investments comparable to the retirement annuity. Ignoring taxes, what is the most you would pay for this financial instrument?
As a small financial analyst, you have been selected by a client to provide assistance in thefollowing cases: A. Explain why the Future Value of an annuity due is always greater than the Future Valueof an ordinary annuity with the same rate of return and the same amount of periods.B. Marcia is planning to buy a car in five years’ time. She estimates that the car would cost$2,500,000.000. Given that the existing interest rate is 12 %, how much money shouldshe invest now? C. Marcia has an option to invest in an insurance policy at a rate of 20 % to achieve her goalof purchasing the car for $ 2,500,000. How much should she invest at the beginning ofeach year for the next 5 years in order to achieve her goal? D. If the interest rate decreases from 20% to 15%, by how much would Marcia’s annualinvestment in part C. change?
Suppose that Kate is 45 years old and has no retirement savings. She wants to begin saving for retirement, with the first payment coming one year from now. She can save $20,000 per year and will invest that amount in the stock market, where it is expected to yield an average annual return of 5.00% return. Assume that this rate will be constant for the rest of her's life. In short, this scenario fits all the criteria of an ordinary annuity. Kate would like to calculate how much money she will have at age 60. Use the following table to indicate which values you should enter on your financial calculator. For example, if you are using the value of 1 for N, use the selection list above N in the table to select that value. Input Keystroke Output N Input Keystroke N Output I/Y Using a financial calculator yields a future value of this ordinary annuity to be approximately Kate would now like to calculate how much money she will have at age 65. Input Keystroke N Output Use the following table…
You have discussed your retirement plans with your significant other and plan to move to a state with a lower cost of living upon retirement. You plan on living off $110,000 annually. You understand that your retirement account will likely yield a 5% return. Using the 4% Rule, how much money do you need in your retirement account upon retirement?(round to the nearest dollar){DO NOT INCLUDE COMMAS OR $}
Amanda is going to invest to help with a down payment on a home. How much would she have to invest to have $23,400 after 9 years, assuming an interest rate of 1.79% compounded annually? Do not round any intermediate computations, and round your final answer to the nearest dollar. If necessary, refer to the list of financial formulas.
You invest $2000 today at 7% per year. If you leave thisfor your grandchildren by not touching the account for80 years, what is the amount of interest on interestearned for this investment? Please explain how to do this problem in the financial calculator. The most important thing is that I understand how to solve the problem on my own
You have discussed your retirement plans with your significant other and plan to move to a state with a lower cost of living upon retirement. You plan on living off $110,000 annually. You understand that your retirement account will likely yield a 5% return. Using the 4% Rule, how much money do you need in your retirement account upon retirement?
Assume that you just inherited an annuity that will pay you $10,000 per year for 10 years, with the first payment being made today. A friend of your mother offers to give you $60,000 for the annuity. If you sell it, what rate of return would your mother’s friend earn on his investment? If you think a “fair” return would be 6%, how much should you ask for the annuity? What keys do I need to enter in a financial calculator to get the answers of (13.70%, $78,016.92)/ only show me the keys to enter in a financial calculaotr. not excel and not algebra
Sandra wants to take the next six years off work to travel around the world. She estimates her annual cash needs at $31,000 (if she needs more, she will work odd jobs). Sandra believes she can invest her savings at 12% until she depletes her funds. (Click the icon to view Present Value of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Requirement 1. How much money does Sandra need now to fund her travels? (Round your answer to the nearest whole dollar.) With the 12% interest rate, Sandra needs Requirement 2. After speaking with a number of banks, Sandra learns she will only be able to invest her funds at 4%. How much does she need now to fund her travels? (Round your answer to the nearest whole dollar.) With a 4% interest rate, Sandra would need If Sandra's savings are earning a lower interest rate (4%), she will need to save to…
Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%.What is your monthly payment to her, and how much interest will you pay her over the year (9 months)?(Fill in the blanks below and give your answers as whole numbers.)The amount of interest per month you would pay Aunt Sally is $__(1)__ .The total interest you will pay her over the year (9 months)is $__(2)__ .
Subject :- Accounting You have discussed your retirement plans with your significant other and plan to move to a state with a lower cost of living upon retirement. You plan on living off $85,000 annually. You understand that your retirement account will likely yield a 5% return. Using the 4% Rule, how much money do you need in your retirement account upon retirement?(round to the nearest dollar){DO NOT INCLUDE COMMAS OR $}