Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 74.00.During these years of part-time work, he will neither make deposits to nor take withdrawals fromhis retirement account. Exactly one year after the day he turns 74.0 when he fully retires, he willwants to have $3,437,367.00 in his retirement account. He he will make contributions to hisretirement account from his 26th birthday to his 65th birthday. To reach his goal, what must thecontributions be? Assume a 7.00% interest rate.

To determine the annual contributions Derek needs to make to his retirement account to reach his…

Answered: Derek plans to retire on his 65th…

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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Jane and Sue are twins. Today is their 45th birthday. They both invested in a retirement account with 9 percent compounded annually. Jane began to deposit $60000 per year on her 24th birthday for a total of 8 annual deposits, whereas Sue started her first deposit on her 35th birthday, for a total of 20 annual deposits. They both then do nothing by putting aside the account balance till their planned retirement age. (answer to 2 decimal places) a)Calculate Jane’s current retirement account balance on her 45th birthday. b)Based on your answer in a), how long from now does Jane need to wait to accumulate $5.5 million in her retirement account?c)At the time when Sue places her 20th annual deposit , how old will Sue be?d)If Sue planned to accumulate $5.5 million on her 65th birthday, calculate the amount of her annual deposit.
Eugene began to save for his retirement at age 30, and for 11 years he put $ 275 per month into an ordinary annuity at an annual interest rate of 7% compounded monthly. After the 11 years, Eugene was unable to make the monthly contribution of $ 275, so he moved the money from the annuity into another account that earned 11% interest compounded monthly. He left the money in this account for 24 years until he was ready to retire. How much money did he have for retirement?
Jalen just turned 71 years old on December 16, 2023. He knows nothing about personal income taxes and has always relied on his accountant and investment advisor to look after him. He is not too clear on what was said or by which advisor but he remembers one of them mentioning that he needed to take action on his Registered Retirement Savings Plan (RRSP) before the end of the year. He also can't remember what was said about the different conversion options but remembers that one of the options was not tax-efficient. Which is the least tax-efficient? Select one: O a. Purchase a term annuity.. b. Withdraw the RRSP. c. Transfer the funds to a Registered Retirement Income Fund (RRIF). . d. Transfer to a registered annuity.
Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2023). In 2023, her net Schedule C income was $280,000. This was her only source of income. This year, Rita is considering setting up a retirement plan. What is the maximum amount Rita may contribute to the self-employed plan in each of the following situations? Note: Round your intermediate calculations and final answers to the nearest whole dollar amount. Problem 13-85 Part b (Algo) b. She sets up an individual 401(k). Maximum contribution
Joseph Kirn has just inherited $827,790 which he would like to use as part of his retirement nest egg. He invested the funds at a 3.47 percent annual rate compounded annually. Joseph will reach age sixty in 17 years and will retire early. Now he would like to know how much he could withdraw from the fund in equal installments at the end of each year from the year he reaches age 60 until he reaches age 70½, the year he must start withdrawing funds from his individual retirement account (IRA). Joseph assumes the funds will continue to earn at a 3.47 percent annual rate. In other words, Joseph would like to know the annual year-end payment from an eleven-year annuity (from age 60 to the year he will be 70½), earning 3.47 percent annually. Round the answer to two decimal places.
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 70.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 70.0 when he fully retires, he will begin to make annual withdrawals of $137,713.00 from his retirement account until he turns 90.00. After this final withdrawal, he wants $1.31 million remaining in his account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be? Assume a 9.00% interest rate. (ROUND TO 4 DECIMAL PLACES.)
Sam started working for the LED company on his 25th Birthday. Each month P30 was withheld from his salary and matched by an equal contribution from his employer, to be kept into a retirement fund. At the end of each year the contributions for the year were invested in a trust fund where it earned 8% interest compounded annually. Pedro retired on his 60th birthday and elected to receive an annuity of 20 annual payments, the first to be received immediately. What was the amount of each payment? DRAW THE CASH FLOW DIAGRAM. Use 4 decimal places in between process and 2 decimal for the final answer kindly substitute the values on the formula you're going to use. Thankyouu
Ashvin
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 73.25. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 73.25 when he fully retires, he will begin to make annual withdrawals of $150, 876.06 from his retirement account until he turns 90.98. After this final withdrawal, he wants $1.81 million remaining in his account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be? Assume a 7.99% interest rate.
8. Itay began making contributions to a new retirement account on his thirtieth birthday. He made a contribution of $20,000 at the beginning of each year through his sixty-fourth birthday. Starting at age sixty-five and continuing through his eightieth birthday, he made a level withdrawal on his birthday. Find the amount of these withdrawals if they completely exhaust the balance in his account, and the annual effective interest rate is 7% until he is sixty-five, then 6% thereafter
Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2020). In 2020, her net Schedule C income was $300,000. This was her only source of income. This year, Rita is considering setting up a retirement plan.What is the maximum amount Rita may contribute to the self-employed plan in each of the following situations? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) a. She sets up a SEP IRA. b.She sets up an individual 401(k).
Eddie & Kristen had an interesting year in 2020. First of all, they got married on March 28, 2020, when they were both 26 years of age. Unfortunately, a distant aunt passed away, leaving them $10,000 of life insurance proceeds in 2020, which they used to pay for part of the wedding. Kristen's parents gave them another $15,000 to pay for the rest of the wedding. Eddie had $50,000 of taxable gross salary and Kristen had $40,400 of taxable gross salary. They were very blessed with gifts at their wedding, so they had a robust amount of investment income in 2020. They had $2,900 of interest, total dividends of $4,200 of which $3,200 were qualified, from their Morgan Stanley account. They also bought bonds from their local school district where Kristen teaches that paid them $2,000 of interest income. Eddie received an achievement award at work for finally becoming certified in his field that was worth $200. Additionally, he got a pair of safety shoes free from his employer that are…

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