At age 35, Ronald earns his MBA and accepts a position as a vice president of an asphalt company. Assume that he will retire at the age of 65, having received an annual salary of $105,000, and that the interest rate is 8%, compounded continuously.a) What is the accumulated present value of his position?b) What is the accumulated future value of his position?

Present value can be calculated by discounting all future cash flows with the cost of capital for…

Answered: At age 35, Ronald earns his MBA and…

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

Barry, age 45, works for an advertising company, where he earns $75,000. Barry would like to retire at age 65. He earns 9% on his investments, and inflation has averaged only 3% annually. Assuming he is expected to live until age 90 and he has a wage replacement ratio of 80% (in today's dollars), how much will Barry need to have accumulated when he retires to maintain his current lifestyle during retirement? A) $1,100,265 B) $2,322,382 C) $1,490,653 D) $1,863,311
If Mr. X wants to retire at an age of 56 and he wants to accumulate in his bank account at that time TK 1,00,00,000 at the end of 56th year what amount should be deposited each year on a semiannual basis in the bank account to gain that money if the bank gives a rate of 8% on deposits? He is 25 year old now
Lastly, Hector wants to invest in a certificate of deposit (CD) to purchase a boat that costs $28,500 when he retires. Leaf Investments offers a CD with 13% compounded semiannually. How much would Hector have to put in the CD today to gain $28,500 in 30 years?
A man who is 30 years old at the start of the year, is considering getting an MFM degree. He currently earns $40,000 per year and expects to continue earning that amount for the rest of his working life (until age 65). He will give up his income for two years and will pay $20,000 per year in tuition, if he attends business school. In exchange, he expects a raise in his salary after completing his MFM. Assume that the post-graduation salary grows at a 5% annual rate and that the discount rate is 8%. What is the minimum expected starting salary after graduation for him that makes attending business school a positive-NPV investment? (Assuming that all cash flows happen at the end of each year.) Use Time Value of Money calculations.
Noah invests $600 at the end of each quarter for 30 years in an account paying 5.64% interest compounded quarterly and then he retires. Suppose that he was in the 15% bracket when the deposits were made and interest was earned. Suppose his tax bracket is now 33% in retirement. Find the current after-tax value of Noah's account if it was set-up as (i) a Traditional Individual Retirement Account (IRA): $ (ii)a Roth Individual Retirement Account (Roth-IRA): $
Luis has $170,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new account. Luis also plans to put $3000/quarter into the new account until his retirement 30 years from now. If the new account earns interest at the rate of 4.5%/year compounded quarterly, how much will Luis have in his account at the time of his retirement? (Round your answer to the nearest cent.)
Gail decided that in six years she would leave her job in publishing and retire to Arizona. What amount should Gail invest today, so that she will be able to withdraw $50,000 at the end of each year for 30 years after she retires? Assume she can invest money at 5%, compounded annually.
Timothy is retiring from his job soon at which time his employer will make the following offer: 1. A lumpsum amount of $200,0002. A sum of $15,000 at the beginning of each year for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?
Mr. De Castro wishes to have P1,400,000.00 when he retires 15 years from now. If he can expect to receive 4% annual interest, how much must he set aside in each of 15 equal annual beginning of year deposits.Mr. De Castro wishes to have P1,400,000.00 when he retires 15 years from now. If he can expect to receive 4% annual interest, how much must he set aside in each of 15 equal annual beginning of year deposits.
Oscar is looking forward to retirement in a few years when he will have completed 20 years of pensionable service. Oscar's pension plan provides an annual pension benefit of 1.5% of average career earnings for each year of pensionable service. Using information from Oscar's pension statements, he estimates his career average annual earnings will be $50,000 when he retires with 20 years of service. Given these assumptions, calculate Oscar's annual pension benefit that he can expect to receive when he retires. $7,500 $10,000 $15,000 $20,000

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