Your company sponsors a 401(k) plan into which you deposit 10 percent of your $120,000 annual Income. Your company matches 75 percent of the first 10 percent of your earnings. You expect the fund to yield 12 percent next year. Assume you are currently in the 31 percent tax bracket. a. What is your annual Investment in the 401(k) plan? (Round your answer to 1 decimal place. (e.g., 32.1)) b. What is your one-year return? (Round your answer to 3 decimal places. (e.g., 32.161)) a. Annual investment b. One-year return 184.000 %

Your company sponsors a 401(k) plan into which you deposit 10 percent of your $120,000 annual Income. Your company matches 75 percent of the first 10 percent of your earnings. You expect the fund to yield 12 percent next year. Assume you are currently in the 31 percent tax bracket. a. What is your annual Investment in the 401(k) plan? (Round your answer to 1 decimal place. (e.g., 32.1)) b. What is your one-year return? (Round your answer to 3 decimal places. (e.g., 32.161)) a. Annual investment b. One-year return 184.000 %

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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How much money does Suzie need to have in her retirement savings account today if she wishes to withdraw $25,000 a year for 3 years? She expects to earn an average rate of return of 13 percent. A. $59,028.81 OB. $65,419.81 OC. $71,533.33 OD. $85,160.98 E. $87,391.34
Your employer automatically puts 5 percent of your salary into a 401(k) retirement account each year. The account earns 8% interest. Suppose you just got the job, your starting salary is $50000, and you expect to receive a 3% raise each year. For simplicity, assume that interest earned and your raises are given as nominal rates and compound continuously. Find the value of your retirement account after 35 years Value = $
4) Ashley deposits $500 into an investment fund each January 1 starting in 2005 and continuing to 2014 inclusive. If the fund has an average annual growth rate of ji = 10%, how much will be in her account on January 1, 2019?
You would like to give your son $70,000 towards his college education 12 years from now. How much money must you set aside today for this purpose if you can earn 8% on your investments? B. $176.271.91 C. $27.797.96 A. $12.250.00 interest rate, you will triple your money in ately D. $3,688.65 E. $14.211.11
Suppose that you have an opportunity to invest in a fund that pays 12% interest compoundedannually. Today, you invest P10,000 into this fund. Three years later, you borrow P5,000 from alocal bank at 10% effective annual interest and invest it in the fund. Two years later, you withdrawenough money from the fund to repay the bank loan and all interest due on it. Three years laterfrom this withdrawal you start taking P2,000 per year for 5 years out of the fund. After 5 years, youhave withdrawn your original P10,000. The amount remaining in the fund is earned interest. Howmuch remains?
Suppose you have estimated that you will need $2,500 per month in your retirement to meet your expenses and live comfortably, and that you have found or chosen a fund (account) which pays monthly interest 4% APR . What principal, or balance, will your account need to maintain in order to be able to pay you this amount each month? Round/take your answer to the nearest cent.
4.3 You decide to put R12,000 in a money market fund that pays interest at the annual rate of 8.4%, compounding it monthly. You plan to take the money out after one year and pay the income tax on the interest earned. You are in the 15% tax bracket. Find the total amount available to you after taxes.
Assume that you own an annuity that will pay you $14,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $125,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment? a. 11.20% b. 4.46% c. 4.87% d. 20.01% e. 5.90%
Suppose you inherit $100,000 at age 25 and immediately invested in a growth fund who’s annual rate of return average is 13%. Five years later, you transfer all proceeds from the scrubs fun into a long-term IRA that pays an average annual rate of 8%. Immediately you start making additional contributions of $7000 per year to the same IRA. Assuming continuous interest, steady interest rates, and a perfect record of making annualcontributions, how much is this IRA worth when you reach the age of 65? The formula that will need to be used is A = P e^r*t + D/r (e^r*t - 1). Hint: Use the continuous interest formula to find me a cumulated amount for the first five years, which is then the initial investment, P, into the IRA
C.10. Assume that at age 25 you have decided to become a millionaire by age 65. You decide to in- vest regularly at the end of every year for 40 years into a fund earning 12 percent interest. The initial investment deposit at EOY 1 will be relatively small, but you expect to increase the amount of each subsequent deposit by 8 percent every year thereafter. (a) Find the amount of the initial investment (deposit at EOY 1). (b) Find the amount of the final investment (deposit at EOY 40).
Calculate the present value of a retirement fund if you put $1,750 in your savings account at the end of each of each quarter for the next 35 years? Assume that your savings account pays 8% compounded quarterly. O $20,277.13 O$82,030.04 O $83,670.64 O None of the answers are correct
Assuming a tax rate of 30%, a nominal return of 9%, a savings period of 35 years, and an annual deposit of $10,000 into an RRSP, how much will a person have saved for retirement? What is your recommendation regarding when the contributions should be made to the RRSP? Justify your answer using the time value of money

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