Question

A. Assume you are staring a new job tomorrow and will be paid $100,000/year with 2...

A. Assume you are staring a new job tomorrow and will be paid $100,000/year with 2 paydays/month. If you invest 5% (of each paycheck) in your 401k a mutual fund that returns 9.5%/year, how much will this retirement account be worth after 50 years of work (at retirement)? Check your MAGNATUDES __________________________________

B. Use your answer above as the balance in your retirement account at retirement. How much could you withdraw each and every year from this account assuming that you can invest (the above money) at 5%/year and have zero in the account after 30 years?.

Homework Answers

Answer #1

1) A. Assuming that the $100,000 per year shall be constant till retirement.

Value of the retirement account after 50 years = $4,867,224.04

1) B. Value of each annual withdrawal = $316,619.91

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