A couple will retire in 40 years. They plan to spend $50,000 of their savings each year,with the withdraw coming at the end of the year. They expect retirement to last for 25years. They believe they can earn 9% interest on retirement savings by investing in highquality mutual funds. They realize too, that in 20 years they will also need to spend$80,000 (one time) to cover costs of their child's education. If the couple makes year-end annual payments starting in year 1 into a savings plan, how much does the coupleneed to save per year to cover both future college and future retirement costs? (roundinterim calculations to dollars and cents. Round your answer to the nearest dollar)Multiple ChoiceOnone of the choices278025643017

Present value refers to the worth of the amount in current times that is expected to be received in…

vill retire in 40 years. They plan to spend $50,000 of their sav ithdraw coming at the end of the year. They expect retirement ey believe they can earn 9% interest on retirement savings by in tual funds. They realize too, that in 20 years they will also nee one time) to cover costs of their child's education. If the coup ■l payments starting in year 1 into a savings plan, how much doe ve per year to cover both future college and future retirement culations to dollars and cents. Round your answer to the neare

vill retire in 40 years. They plan to spend $50,000 of their sav ithdraw coming at the end of the year. They expect retirement ey believe they can earn 9% interest on retirement savings by in tual funds. They realize too, that in 20 years they will also nee one time) to cover costs of their child's education. If the coup ■l payments starting in year 1 into a savings plan, how much doe ve per year to cover both future college and future retirement culations to dollars and cents. Round your answer to the neare

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 39P

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A couple will retire in 40 years. They plan to spend $50,000 of their savings each year, with the withdraw coming at the end of the year. They expect retirement to last for 25 years. They believe they can earn 9% interest on retirement savings by investing in high quality mutual funds. They realize too, that in 20 years they will also need to spend $80,000 (one time) to cover costs of their child's education. If the couple makes year-end annual payments starting in year 1 into a savings plan, how much does the couple need to save per year to cover both future college and future retirement costs? (round interim calculations to dollars and cents. Round your answer to the nearest dollar)
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A couple will retire in 50 years; they plan to spend about $32,000 a year in retirement, which should last about 25 years. They believe that they can earn 9% interest on retirement savings. a) If they make annual payments into a savings plan, how much will they need to save each year?Assume the first payment comes in 1 year. b) How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $62,000 on their child’s college education? Show workings and calculation with scientific calculater
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