Agnes is 40 years old. She wants to know how much she should be savingeach year for retirement. Below are the specifics: She wants to retire at 60and expects to live until she's 90 She currently makes $45,000 and expectsthat to increase each year with inflation (2%). She thinks she will need about70% of that to live on in retirement. She has $40,000 in an RRSP Herinvestments are earning a real rate of 7% When she retires she will move herinvestments into a more conservative portfolio and earn 3% per year. Sheexpects that CPP will be about $15,000 per year. How much will she have tosave each year to make up the difference?

The value of money changes over time. The future value of a present amount is calculated by using an…

Answered: Agnes is 40 years old. She wants to…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 43P

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Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $45,000 and expects that to increase each year with inflation. She thinks she will need about 70% of that to live on in retirement. • She has $40,000 in an RRSP • Her investments are earning a real rate of 6% return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 3% per year. • She expects that CPP will be about $15,000 per year in today's dollars. CPP amount is inflation adjusted. Given this information, how much will she have saved when she is 60 (in real dollars)?
Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $45,000 and expects that to increase each year with inflation. She thinks she will need about 70% of that to live on in retirement. ⚫She has $40,000 in an RRSP • Her investments are earning a real rate of 6% return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 3% per year. • She expects that CPP will be about $15,000 per year in today's dollars. CPP amount is inflation adjusted. Given this information, how much will she have saved when she is 60 (in real dollars)?
Molly would like to spend $55,000 (inflation adjusted, in today's dollars) each year in retirement for 35 years (beginning of year). She believes she can earn a 8.5% rate of return pre-retirement, 5.5% during retirement, and inflation will be 3.0%. She has 30 years until he plans on retiring and she's already saved $50,000 towards her goal. Approx. how much does she need at retirement to accomplish her goal? O $4,236,000 $3,200,023 O $2,759,000 O $1,980,000 4
molly would like to spend $65,000 (inflation adjusted, in today's dollars) each year in retirement for 25 years (beginning of year). she believes she can earn a 7.5% rate of return pre-retirement, 6% during retirement, and inflation will be 3.5%. she has 40 years until he plans on retiring and she's already saved $10,000 towards her goal. how much is $65k worth at the time of retirement?
Monica has decided that she wants to build enough retirement wealth, if invested at 8 percent per year, to provide her with $3,500 of monthly income for 20 years. To date, she has saved nothing, but she still has 30 years until she retires. How much money does she need to contribute per month to reach her goal? First compute how much money she will need at retirement, then compute the monthly contribution to reach that goal.
Munira Al Falasi is 40 years old. She wants to begin saving for retirement with the first payment to come 1 year from now. She can save $5,000 per year with 9% rate of return. How much money will Munira have at the age of 65? How much money will Munira have at the age of 70? Munira 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 of return, how much will Munira be able to withdraw at the end of each year after her retirement at each retirement age? Munira expects to live for 20 years, if she retires at 65: Munira expects to live for 15 years, if she retires at 70:
Monica has decided that she wants to build enough retirement wealth that, if invested at 9 percent per year, will provide her with $4,800 of monthly income for 20 years. To date, she has saved nothing, but she still has 25 years until she retires. How much money does she need to contribute per month to reach her goal? First compute how much money she will need at retirement, then compute the monthly contribution to reach that goal. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Contribution per month mane
Shelly Franks is planning for her retirement, so she is setting up a payout annuity with her bank. She is now 25 years old, and she will retire when she is 65. She wants to receive annual payouts for twenty years, and she wants those payouts to receive an annual COLA of 2.8%. (a) She wants her first payout to have the same purchasing power as does $14000 today. How big should that payout be if she assumes inflation of 2.8% per year? (b) How much money must she deposit when she is 65 if her money earns 8.1% interest per year? (c) How large a monthly payment must she make if she saves for her payout annuity with an ordinary annuity? (The two annuities pay the same interest rate.) (d) How large a monthly payment would she make if she waits until she is 30 before starting her ordinary annuity?
Mr. Agunton is planning for her retirement. He is 30 years old today and would like to have N500,000 when he turns 55, he estimates that he will be able to earn 8 percent rate of return on her retirements over time; he wants to set aside a constant amount of money every year (at the end of the year to help achieve his objective. How much money did Agunfon invest at the end of each of the next 25 years to realize his goal of N500,000 at the end
Yang Daiyu expects to retire in 30 years. She has decided that she would like to retire with enough money in savings to withdraw $4,500 per month for 24 years after she retires. Knowing she will be conservative with her retirement fund once retired, she believes that she will earn a rate of 3% per year from her retirement date onwards. Daiyu wonders how much she has to save per month in order to have that amount (calculated in (a)) at the time she retires. At the moment, she has about $9,000 in her savings account but she knows that will not be enough. She believes that she can earn an after-tax return of 5% compounded monthly on her savings. How much does Daiyu need to save each month for the next 30 years to reach her goal?
Your father is 50 years old and will retire in 10 years. Heexpects to live for 25 years after he retires, until he is 85. He wants a fixed retirement incomethat has the same purchasing power at the time he retires as $50,000 has today. (The realvalue of his retirement income will decline annually after he retires.) His retirement incomewill begin the day he retires, 10 years from today, at which time he will receive 24 additionalannual payments. Annual inflation is expected to be 4%. He currently has $90,000 saved,and he expects to earn 8% annually on his savings. How much must he save during eachof the next 10 years (end-of-year deposits) to meet his retirement goal?
Georgia McBeal is trying to save for her retirement. She believes she can earn 10% on average each year on her retirement fund. Assume that at the beginning of each of the next 40 years, Georgia will allocate x dollars to her retirement fund. If at the beginning of a year Georgia has y dollars in her fund, by the end of the year, it will grow to 1.1y dollars. How much should Georgia allocate to her retirement fund each year to ensure that she will have $1 million at the end of 40 years? What key factors are being ignored in this analysis of the amount saved for retirement?

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