Question

Alexa is saving for retirement, she is 35 years old and wants to retire at 70. She estimates that she will need to have $1.2 million to retire comfortably. She currently deposits $550 a month into her account 401k, what APR does she need to earn?

Answer #1

We can use financial calculator for calculation of APR using below key strokes:

deposits are monthly. so, we need to convert no. of years in to months. no. of years are 70 - 35 = 35 and no. of months are 35*12 = 420 months.

N = no. of months = 420; PMT = monthly deposits = -$550; FV = future value = $1,200,000; PV = 0 > CPT = compute > I/Y = interest rate = 0.6496%

Interest rate we calculated above is monthly rate. To get APR we need to multiply monthly interest rate with 12.

APR = monthly interest rate*12 = 0.6496%*12 = 7.7952% or 7.8%

PMT should be entered as negative value otherwise calculator will show error.

1. Kathleen wants to retire on $55,000 per year for 20 years.
She estimates that she will be able to earn interest at the APR of
9% compounded annually, throughout her lifetime. To reach her
retirement goal, Kathleen will make annual contributions to her
account for the next 35 years. One year after making her last
contribution, she will take her first retirement check. How large
must her yearly contributions be?

Terry Austin is 30 years old and is saving for her
retirement. She is planning
on making 35 contributions to her retirement account at the
beginning of
each of the next 35 years. The first contribution
will be made today
(t = 0) and the final contribution will be made 34 years from
today (t = 34).
The retirement account will earn a return of 8.2 percent a
year. If each
contribution she makes is $5,493.00 how much will be in the
retirement...

Your client is 21 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $8,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 11%
in the future.
a. If she follows your advice, how much money will she have at
65? Round your answer to the nearest cent.
$
b. How much will she...

Your client is 23 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $15,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 8%
in the future.
A. If she follows your advice, how much money will she have at
65? Round your answer to the nearest cent.
B. How much will she have...

Your client is 21 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $10,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 6%
in the future.
If she follows your advice, how much money will she have at 65?
Round your answer to the nearest cent.
$
How much will she have at...

Your client is 34 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $2,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 8%
in the future.
If she follows your advice, how much money will she have at 65?
Round your answer to the nearest cent.
$
How much will she have at...

A 20 year old wants to retire as a millionaire by the time she
turns 70. (With life spans increasing, and the social security fund
being depleted by baby boomers, the retirement age will have
invariably risen by the time she reaches 65 years of age, probably
to something even higher than 70, actually.) How much will she have
to save at the beginning of each month if she can earn 5%
compounded annually and have $1,000,000 by the time...

Your client is 29 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $8,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 12%
in the future.
A.If she follows your advice, how much money will she have at
65? Round your answer to the nearest cent.
B. How much will she have at...

Your client is 21 years old. She wants to begin saving for
retirement, with the first payment to come one year from now. She
can save $7,000 per year, and you advise her to invest it in the
stock market, which you expect to provide an average return of 12%
in the future.
*PLEASE DO NOT ROUND YOUR TOTALS!!
A. If she follows your advice, how much money will she have at
65? Round your answer to the nearest cent....

Anna wants to plan for retirement. She stimates that she would
need $24,000 when she retires at age 67 to live the first year
after retirement (year 68). She estimates that the amount that she
will need for living will have to grow by 3.5% every year to keep
up with inflation. Her retirement account earns 4.5% every year.
How much should she start saving on her 36th birthday to
comfortably live till she is 85 years old, if she...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 7 minutes ago

asked 34 minutes ago

asked 48 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago