A man is planning to retire in 20 years, He can deposit money for his retirement at 8% compounded monthly. It is estimated that the future general inflation (f) rate will be 3% compounded annually. What deposit must be made cach month until the man retires so that he can make annual withdrawals of $20,000 in terms of today's dollars. over the 15 ears following his retirement? (Assume that his first withdrawal occurs at the end of the first six months after his retirement.) 221.95 O 132.75 O 493.69 793.90

A man is planning to retire in 20 years, He can deposit money for his retirement at 8% compounded monthly. It is estimated that the future general inflation (f) rate will be 3% compounded annually. What deposit must be made cach month until the man retires so that he can make annual withdrawals of $20,000 in terms of today's dollars. over the 15 ears following his retirement? (Assume that his first withdrawal occurs at the end of the first six months after his retirement.) 221.95 O 132.75 O 493.69 793.90

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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Mr. Gordon plans to invest $400 at the end of each month in an account that pays 6%, compounded monthly. After how many months will the account be worth $30,000? (a) State whether the problem relates to an ordinary annuity or an annuity due. (b) Solve the problem. (Round your answer UP to the nearest month.)
You are planning to make monthly deposits of $340 into a retirement account that pays 9 percent annual interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 35 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value
You are planning to make monthly deposits of $500 into a retirement account that pays 7.7 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 30 years?
When you retire at 65, you wish to be able to have $3,000 each month for 25 years. How much would you have to deposit into an account each month, starting when you are 23, if the account earns 7.6% compounded monthly?
You are expected to retire in 35 years from today. If you make an annual deposit of $20,500 at the end of each year into an investment account that pays 6.88% annually, how much money will your retirement account have at the end of 35 years if the interest in compounded.
Which of the following statements are reasons employers may choose to delay eligibility of employees to participate in a retirement plan? 1. Employees do not start earning benefits until they become plan participants (except in defined benefit plans, which may count prior service). 2. Since turnover is generally highest for employees in their first few years of employment and for younger employees, it makes sense from an administrative standpoint to delay their eligibility. A. 1 only. B. 2 only. C. Both 1 and 2. D. Neither 1 nor 2.
You make $10,000 deposit 1 year from now, $15,000 deposit 3 years from now and $20,000 deposit 5 years from now. You plan to retire 30 years from now. What monthly income you will receive due to these deposits over five years after the retirement? The first payment would be received at the end of the first month after the retirement and the last payment on the month ending the fifth year. The rate of return is 7.14%. Choices: $3,956.71 $9,221.89 $3,235.26 $4,267.06 $5,614.60
a. You plan to invest $5,000 in an individual retirement arrangement today at a nominal annual interest rate of 10%, which is expected to apply to all future years. 1. How much you will have in the account at the end of 15 years if interest is compounded (1) annually? (2) Semiannually? (3) Quarterly and (4) daily (assume a 365-day a year)? 2. Compute effective annual rate and explain the relationship exists between compounding frequency and the nominal and effective annual rates ?
You make $5,700 annual deposits into a retirement account that pays an APR of 10.8 percent compounded monthly. Your first deposit will be one year from today. How large will your account balance be in 33 years?
Aunt May will start receiving quarterly pension ($5000 quarterly paycheck) beginning one quarter from now. The pension will continue for the next 25 years. The quarterly paycheck will increase by 5% each year to adjust for inflation. What is the total value of Aunt May's pension as of today, assuming a nominal interest rate of 6% compounded monthly? A. Between $350,000 and $380,000 B. Between $380,000 and $400,000 C. Between $400,000 and $420,000 D. Between $420,000 and $440,000 E. More than $440,000
You make $8, 700 annual deposits into a retirement account that pays an APR of 10.1 percent compounded monthly. Your first deposit will be one year from today. How large will your account balance be in 33 years?

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