Sam is currently 30 years of age. He owns his own business and wants to retire at the age of 60. He has little confidence in the Social Security system. He wants to retire with an annual income of $72,000. a. If Sam believes he will live to age 90, how much does he have to accumulate by the time he reaches age 60 to receive $72,000 at the end of each year for the rest of his life? Sam believes he can earn 8 percent on his money in a stock mutual fund. $810,560.40 b. How much does he have to accumulate if he wants the payment of $72,000 at the beginning of each year? $875,405.23 c. What dollar amount of interest will Sam have earned during retirement if he receives his $72,000 at the beginning of each year?

Sam is currently 30 years of age. He owns his own business and wants to retire at the age of 60. He has little confidence in the Social Security system. He wants to retire with an annual income of $72,000. a. If Sam believes he will live to age 90, how much does he have to accumulate by the time he reaches age 60 to receive $72,000 at the end of each year for the rest of his life? Sam believes he can earn 8 percent on his money in a stock mutual fund. $810,560.40 b. How much does he have to accumulate if he wants the payment of $72,000 at the beginning of each year? $875,405.23 c. What dollar amount of interest will Sam have earned during retirement if he receives his $72,000 at the beginning of each year?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 2FPE

See similar textbooks

Similar questions

Sam is currently 30 years of age. He owns his own business and wantsto retire at the age of 60. He has little confidence in the current SocialSecurity system. He wants to retire with an annual income of $72,000a year.a. If Sam believes he will live to age 90, how much does he have to accumulateby the time he reaches age 60 to receive $72,000 at the end of each yearfor the rest of his life? Sam believes he can earn 8 percent on his money in astock mutual fund.b. How much does he have to accumulate if he wants the payment of $72,000at the beginning of each year?c. What dollar amount of interest will Sam have earned during retirement if hereceives his $72,000 at the beginning of each year?
Nadine is retiring at age 62 and expects to live to age 85. On the day she retires, she has $1,650,000 in her retirement savings account. She is somewhat conservative with her money and expects to earn 6 percent during her retirement years. How much can she withdraw from her retirement savings each month if she plans on giving $300,000 to her grandson on the morning of her death? PLEASE SHOW WORK
Peter is 65 years old and has just attended his retirement party. He has amassed $1.50 million in retirement savings. He and his spouse have figured out that during retirement, they need to withdraw $100,000 at the end of each year from their retirement savings to maintain the standard of living that they would like to have. If they can earn 5% interest on the unspent balance in their retirement account, how many years will it be before their retirement savings are exhausted? O O 3 30 28 32 24 26 44 % 5 MacBook Pro (0 √ 2⁰ 00 * 8
Janine is 25 and has a good job at a biotechnology company. Janine estimates that she will need $946,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $24,500 a year. (She expects that Social Security will pay her an additional $16,000 a year.) She currently has $7,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 6 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have to accumulate in her company's 401(k) plan over the next 40 years in order to reach her retirement income goal? Use Exhibit 1-A. (Round time value factor to 3 decimal places. Round intermediate and final answer to 2 decimal places.) 401(k) accumulation
Janine is 35 and has a good job at a biotechnology company. Janine estimates that she will need $943,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $28,000 a year. (She expects that Social Security will pay her an additional $22,500 a year.) She currently has $2,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 13 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have to accumulate in her company’s 401(k) plan over the next 30 years in order to reach her retirement income goal?
Cecilia is 28 years old today and wants to retire at age 65. She plans to put $5,000 into an account at the end of every year starting at the end of this year and continuing until her 65th birthday. When she reaches age 65, she plans to withdraw the money in equal amounts at the beginning of every year. She assumes she will live until age 90 and make her last withdrawal on her 90th birthday. How big will each withdrawal be if she earns 9% on her investments? $143,358.86. $130,112.13. $120,661.86. $119,368.93.
#7 Sam is currently 30 years of age. He owns his own business and wants to retire at the age of 60. He has little confidence in the Social Security system. He wants to retire with an annual income of $72,000. a. If Sam believes he will live to age 90, how much does he have to accumulate by the time he reaches age 60 to receive $72,000 at the end of each year for the rest of his life? Sam believes he can earn 8 percent on his money in a stock mutual fund. b. How much does he have to accumulate if he wants the payment of $72,000 at the beginning of each year?
Janine is 46 and has a good job at a biotechnology company. Janine estimates that she will need $886,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $27,000 a year. (She expects that Social Security will pay her an additional $17,000 a year) She currently has $4,500 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 6 percent, and she plans to leave it untouched until she retires at age 65. How much will Janine's IRA be worth when she needs to start withdrawing money from it when she retires? Use (Exhibit 1-A. Exhibit 1-8. Exhibit 1-C. Exhibit 1-D). Note: Use appropriate factor(s) from the tables provided. Round time value factor to 3 decimal places and answer to 2 decimal places. Future value of IRA
Mr Trump is 40 years old and will retire at age 65. He will receive retirement benefits but the benefits are not going to be enough to make a comfortable retirement life for him. Trump has estimated that an additional $20,000 a year over his retirement benefits will allow him to have a satisfactory life. How much should Trump deposit today in an account paying 6 percent interest to meet his goal? Assume Trump will have 15 years of retirement. (Do not use excel for computation)
Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to continue at 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security benefit in today’s dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? 1. $6,245. 2. $7,659. 3. $8,432. 4. $9,252.
Diana Prince is looking for a new job. She is currently 50 and wants to retire at age 60. She has saved and invested well so she currently has $1,500,000 in savings. She estimates that her family's living expenses are about $120,000 per year (starting in Year 1) and will remain at this level throughout her life. According to her actuary friends, she can expect to live to age 100 if she finds a safer job. She plans to pay for her children's college. She expects the cost to be $30,000 per year for 8 years with the first payment 3 years from today. Her expected rate of return on her investments is 6%. How much will she need to earn annually at her new job for the next 10 years to fully fund her plan?
Janine is 25 and has a good job at a biotechnology company. She currently has $5,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Janine estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). How much will Janine's IRA be worth when she needs to start withdrawing money from it when she retires? Use Exhibit 1-A. (Round time value factor to 3 decimal places and final answer to the nearest whole dollar.) Future value of IRA SA