A couple will retire in 50 years; they plan to spend about $24,000 a year (in current dollars) in retirement, which should last about 25years. They believe that they can earn a real interest rate of 7% on retirement savings.a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comesin 1 year.Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Annual savings687.99b. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $54,000 on theirchild's college education?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Annual savings1,699.14

Annual savings refers to an amount that is kept aside or invested in some plan for the purpose of…

A couple will retire in 50 years, they plan to spend about 000 a year (in current dollars) in retirement, which should last about years. They believe that they can earn a real interest rate of 7% on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment co in 1 year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Annual savings $ Annual savings b. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $54,000 on their child's college education? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 687.99 s 1 699 14

A couple will retire in 50 years, they plan to spend about 000 a year (in current dollars) in retirement, which should last about years. They believe that they can earn a real interest rate of 7% on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment co in 1 year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Annual savings $ Annual savings b. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $54,000 on their child's college education? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 687.99 s 1 699 14

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8EB: You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how...

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You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
A couple will retire in 50 years; they plan to spend about $32,000 a year (in current dollars) in retirement, which should last about 25 years. They believe that they can earn a real interest rate of 9% on retirement savings. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $62,000 on their child's college education? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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