Question

In: Finance

If you want to be a millionaire when you retire in 50 years, how much must...

If you want to be a millionaire when you retire in 50 years, how much must you save each month if you can earn a 6% annual rate of return?

what is the effective annual interest rate on the imvestment?

please use formula and show work

Expert Solution

Solution:

Given that Future Value, = $1,000,000, Number of years, = 50 and rate of return, = 6%

Since it is compounded monthly, the number of years = 50*12 = 600 and rate of return = 6%/12 = 0.5%

The amount saved is annuity represented by ,

$1,000,000 =

$1,000,000 = (3787.19109)

= $264.05

Hence, you must save $264.05 each month to be a millionaire in 50 years.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------

The effective annual rate of interest, for monthly compounding is

= 1.06168 - 1

= 6.17%

Hence, the effective annual interest rate is 6.17%.

jeff jeffy answered 8 months ago

You want to be a millionaire when you retire in 35 years. How much do you...

You want to be a millionaire when you retire in 35 years. How much do you have to save each month if you can earn an annual return of 11.5 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Savings per month $ How much do you have to save each month if you wait 15 years before you begin your deposits? (Do not round intermediate calculations and round your answer to 2...

11.You want to be a millionaire when you retire in 40 years. a. How much do...

11.You want to be a millionaire when you retire in 40 years. a. How much do you have to save each month if you can earn an annual return of 9.7 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much do you have to save each month if you wait 10 years before you begin your deposits? (Do not round intermediate calculations and round your answer to 2 decimal places,...

You have decided that you want to be a millionaire when you retire in 44 years....

You have decided that you want to be a millionaire when you retire in 44 years. 1. .If you can earn an annual return of 11.22 percent, how much do you have to invest today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 2. .What if you can earn an annual return of 5.61 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 1. amount to...

You want to retire has a millionaire. How much do you need to put away each month if

You want to retire has a millionaire. How much do you need to put away each month if:You use common stocks and have an average return of 10%?You use corporate bonds and have an average return of 6%?You use government bonds and have an average return of 4%?You put your money in a CD at 2.5% interest rate?(use your own age. If you are over 45, solve for saving a $100,000.)

2. Wes wants to retire as a millionaire. How much must Wes save per year for...

2. Wes wants to retire as a millionaire. How much must Wes save per year for 40 years, if he can invest in a mutual fund which pays 4% compounded semi-annually? 3. You just purchased a new car for $45,000. Your down payment on the vehicle was $15,000 and the rest is financed over 5 years at a 6% annual interest rate. Calculate your monthly payment. how would I solve these two? Please and thank you very much.

Good news: You will almost certainly be a millionaire by the time you retire in 50...

Good news: You will almost certainly be a millionaire by the time you retire in 50 years. Bad news: The inflation rate over your lifetime will average about 3.6%. a. What will be the real value of $1 million by the time you retire in terms of today’s dollars? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What real annuity (in today’s dollars) will $1 million support if the real interest rate at retirement is...

3. You want to save enough money to retire as a millionaire. (Age now is 30)...

3. You want to save enough money to retire as a millionaire. (Age now is 30) 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? 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? c. What type of a problem is this?

You would like to have $600,000 when you retire in 30 years. How much should you...

You would like to have $600,000 when you retire in 30 years. How much should you invest each quarter if you can earn a rate of 3% compounded quarterly? a) How much should you deposit each quarter? $ b) How much total money will you put into the account? $ c) How much total interest will you earn?

I want to retire in 40 years. When I retire, I want to withdraw $20,000 every...

I want to retire in 40 years. When I retire, I want to withdraw $20,000 every 6 months from my savings for a period of 10 years. However, at the end of years two and three in my retirement, I will need to spend $40,000 and $60,000 respectively to send my grandson to culinary school. Assuming I can earn 4% compounded semi-annually, answer the following question: How much money will I need at year 40 to fund sending my grandson...

Q1. You want to retire in 40 years and you must start planning now. You understand...

Q1. You want to retire in 40 years and you must start planning now. You understand that it is time to prepare an analysis for you. a) What approach will you use to advise yourself. b) What is your specific suitability profile? c) What is your investment plan for retirement? d) What will be your asset allocation and what is your expected return throughout your life for each allocation?