Question

Don wants to accumulate $55,000 in today's dollar terms in the next 6 years. He expects...

Don wants to accumulate $55,000 in today's dollar terms in the next 6 years. He expects to earn a return of 6.5% per year and inflation is expected to be 1.5%. How much should be the serial payment in the 1st year so that Don can achieve the target?

$6830

$8101

$8346

$8223
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Given,

Future value = $55000

Number of years (n) = 6 years

Return = 6.5% or 0.065

Inflation = 1.5% or 0.015

Solution :-

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Richard would like to receive $120,000 per year (in today's dollars) when he is financial independent...
Richard would like to receive $120,000 per year (in today's dollars) when he is financial independent at age 60. He would like this income to grow at the rate of inflation and never run out. He expects inflation to be 3% per year and his investments to achieve nominal returns of 9% per year (compounded yearly). How much does he need for financial independence (in today's dollars)? Your answer should be rounded to the nearest dollar ($ 0dp). Do not...
An individual wants to retire in 15 years when he turns 65. He wants to have...
An individual wants to retire in 15 years when he turns 65. He wants to have enough money to maintain his current income, which is $55,000 per year. It is assumed that a 6% annual investment rate of return and a 4% inflation rate per year. He expects that he will live to be 90 years old. He expects his raises to equal the inflation rate, approximately how much does he need at retirement to fulfill his retirement goals? (...
At the end of 6 years, Jane wants to accumulate $1,500,000 for a down payment on...
At the end of 6 years, Jane wants to accumulate $1,500,000 for a down payment on a housing unit. She expects to earn 8%—compounded monthly—on her investments over the next 8 years. How much would Jane have to put in her investment account each month to reach her goal? A) $26,300 B) $20,414 C) $16,300 D) $13,684
Ahmad Abu Al-Hawa plans to retire 40 years from now. He expects that he will live...
Ahmad Abu Al-Hawa plans to retire 40 years from now. He expects that he will live 30 years after his retirement. He wants to have enough money upon reaching retirement age to be able to withdraw $180,000 from his account at the end of each year he expects to live. Ahmad plans to accumulate the retirement fund by making an equal deposit at the of each year for the next 40 years. The interest rate is expected to be 12%...
Your father is 50 years old and will retire in 10 years. He expects to live...
Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $55,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24...
Your father is 50 years old and will retire in 10 years. He expects to live...
Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $55,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24...
BACKGROUND: Jason wants to know how much money he needs to have in his retirement account...
BACKGROUND: Jason wants to know how much money he needs to have in his retirement account on the day he retires. Jason makes the following ASSUMPTIONS: --He will withdraw a DIFFERENT amount from his retirement account each year he is retired. He will adjust the withdrawals for inflation each year, following his first annual withdrawal. --Jason wants to withdraw the equivalent of $75,000 (in terms of today's dollars) in the FIRST year he is retired. Following this, each withdrawal will...
Brian Lee is 30 years and wants to retire when he is 65. So far he...
Brian Lee is 30 years and wants to retire when he is 65. So far he has saved (1) $5,850 in an IRA account in which his money is earning 8.3 percent annually and (2) $4,320 in a money market account in which he is earning 5.25 percent annually. Brian wants to have $1 million when he retires. Starting next year, he plans to invest the same amount of money every year until he retires in a mutual fund in...
Your father is 50 years old and will retire in 10 years. He expects to live...
Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $55,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24...
Your father is 50 years old and will retire in 10 years. He expects to live...
Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $55,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT