Question

Suppose you have determined that you want to have retirement savings of $5,000,000 when you retire at age 65, 42 years after you graduate, at age 23. Looking at the long history of the market, you are confident that you can earn at 10% per annum on a well-diversified equity portfolio. a) Calculate much would you have to save annually at the end of each year for the next 42 years to reach your $5,000,000 goal assuming a 10% annual rate of return? b) How much would you need to invest at age 23 to have $5,000,000 in your portfolio at age 65? c) To avoid carry-forward issues, we will assume that the answer in part (a) is $100,000. Suppose that at age 23, you borrow $100,000, paying interest at 4.5% APR, compounded monthly on a 10-year amortization. What would be your monthly payments?

Answer #1

The following calculations are done in order to plan the retirement

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Suppose you have determined that you want to have retirement
savings of $5,000,000 when you retire at age 65, 42 years after you
graduate, at age 23. Looking at the long history of the market, you
are confident that you can earn at 10% per annum on a
well-diversified equity portfolio.
a) Calculate much would you have to save annually at the end of
each year for the next 42 years to reach your $5,000,000 goal
assuming a 10% annual...

Suppose you are 30 years old and want to retire at the age of
age 70 and expect to live another 20 years. On the day you retire,
you want to have $1,000,000 in your retirement savings
account.
i. If you invest monthly starting one month from today and your
investment earns 6.0 percent per year, How much money do you need
to invest every month until you retire?
ii. Now you’re retired with $1,000,000 and you have 20 more...

You are 21 and want to retire at the age of
60. Starting on your retirement date you’d like to have
an annuity paying $25,000 per year for 25 years. Your
uncle is giving you $10,000 when you graduate. How much
would you need to save every year from next year to retirement to
finish funding this annuity? Interest rates are 6%.

Suppose you are 35 years old and would like to retire at age 60.
Furthermore, you would like to have a retirement fund from which
you can draw an income of $150,000 per year-forever! How much
would you need to deposit each month to do this? Assume a constant
APR of 8% and that the compounding and payment periods are the
same.
To draw $150,000 per year, there must be $___ in your savings
account when you retire.
You can...

You just turned 28 and are now seriously planning for your
retirement. You wish to retire two years earlier than the mandatory
retirement age of 65. You hope to be able to make end-of-month
withdrawals from your retirement account of P25,000 per month for a
30-year period after that.
Your plan is to fund your retirement by making monthly deposits
between now and when you retire. The initial monthly deposit will
be made at the end of the coming month....

Suppose you want to retire when you reach age 70, at that time
you want to have $1,000,000 accumulated in your retirement account.
Now your 25 years old, starting today, how much you have to save
equally, at the beginning of each year, in order to reach your
retirement goal if the account earns 5% annually compounded
interest?

You plan to retire as soon as you turn 65. Upon retirement you
want to receive $70,000 per year at the start of each year (first
payment on day you turn 65) for the next 20 years. You are 25 years
old today. You want to start saving today.
1. How much do you have to save each year (annual periods) to
ensure that you will have sufficient funds to receive $70,000 per
year from the age of 65? Initially,...

3.You want to save enough money to retire as a millionaire.
(show all work please)
a. If you could earn 10% with common stocks, how much would you
have to set aside per year to have $1,000,000 when you are 65?
Please use your own age. (Im 21 now, so a 44 year difference)
b. If you were going to make deposit monthly, how much would you
have to set aside per month to have $1,000,000 when you are 65?...

You are 21 and want to retire at the age of 65. Starting on your
retirement date you’d like to have an annuity paying $50,000 per
year until you are 85. Your uncle is giving you $10,000 this year
to get you started on your savings. How much more would you need to
save each year to finish funding your retirement? Interest rates
are 6%.

QUESTION 9
Suppose you plan to retire at age 70, and you want to be able to
withdraw an amount of $83,000 per year on each birthday from age 70
to age 100 (a total of 31 withdrawals). If the account which
contains your savings earns 5.4% per year simple interest, how much
money needs to be in the account by the time you reach your 70th
birthday? (Answer to the nearest dollar.)
Hint: This can be solved as a...

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