Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You just inherited $383,000 and invested it at 8.25% per year. How much could you withdraw at the beginning of the next 20 years?
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Step 1: Explanation of an annuity
An annuity refers to a payment series that provides a periodic sum in exchange for a lump sum payment. Annuities are widely used in retirement and insurance accounts.
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- When you retire, you wish to have $1 million in your retirement account. Currently, you have $100,000 in the account. If you can generate an annualized return of 12% from your investment, compounded monthly, how many years do you think it will take to have $1 million in the account? 11 years 231 years 19 years 53 yearsarrow_forwardIf you invest $10,000 at 8.125% interest compounded daily, how long will it take for you to accumulate $15,000? (Give the number of periods and the number of years, rounded to the nearest hundredth.) b) How long will it take for you to accumulate $100,000?arrow_forwardYou want to invest $100.00 for three years at 10%. What will the $100 dollars grow to?arrow_forward
- You will have $100,000 exactly 7 years from now. You began with an investment of $50,000 at Time Zero. What rate of interest did you earn?arrow_forwardYou are selling off some of your older business equipment and expect to receive $9,000. You plan on investing it at 5% interest rate, compounded monthly, for 2 years. What is the future value of the investment after 2 years?arrow_forwardYou invested $6500 at 6 percent simple interest. How much more could you have earned over a 10 year period if interest had compound annually?arrow_forward
- Suppose you inherited $1,425,000 and invested it at 7.80% per year. How much could you withdraw at the beginning of each of the next 20 years? a. $142,985.98 b. $132,640.06 c. $135,671.09 d. $111,150.00 e. $29,532.45arrow_forwardYou are trying to decide how much to save for retirement. Assume you plan to save $4,000 per year with the first investment made one year from now. You think you can earn 10.5% per year on your investments and you plan to retire in 36 years, immediately after making your last $4,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $4,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be? c. If you hope to live for 28 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 28th withdrawal (assume your savings will continue to earn 10.5% in retirement)? d. If, instead, you decide to withdraw $270,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it…arrow_forward
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