Mike is currently 35 years old and plans on retiring at the age of 65. Ideally,...

Mike is currently 35 years old and plans on retiring at the age of 65. Ideally, Mike would like to retire with $1,000,000.00.

(Input all answers as positive values, no commas, with no symbols ex. no $ or %. Input all % answers as whole numbers without symbols ex. 10.03 for .1003. Input all final answers two decimal places out.)

How much would Mike have to deposit on a monthly basis to reach his goal if he can get a return of 10% compounded monthly?

Solutions

Expert Solution

Given that,

Mike is current 35 years old and he will retire at 65.

Amount needed at the time of retirement FV = $1000000

he will make monthly deposit of PMT for next t = 30 years at interest rate r = 10% compounded monthly

Compounding frequency n=12 months per year

So, monthly deposits can be calculated using FV formula of annuity:

PMT = FV*(r/n)/((1+r/n)^(t*n) - 1) = 1000000*(0.10/12)/((1+0.1/12)^(30*12) - 1) = $442.3824

So, he will need to deposit $442.38 monthly to reach his goal.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Mike is currently 35 years old and plans on retiring at the age of 65. Ideally,...

Mike is currently 35 years old and plans on retiring at the age of 65. Ideally, Mike would like to retire with $1,000,000.00. (Input all answers as positive values, no commas, with no symbols ex. no $ or %. Input all % answers as whole numbers without symbols ex. 10.03 for .1003. Input all final answers two decimal places out.) How much would Mike have to deposit on an annual basis to reach his goal if he can get a...

Mike is currently 35 years old and plans on retiring at the age of 65. Ideally,...

Mike is currently 35 years old and plans on retiring at the age of 65. Ideally, Mike would like to retire with $1,000,000.00. (Input all answers as positive values, no commas, with no symbols ex. no $ or %. Input all % answers as whole numbers without symbols ex. 10.03 for .1003. Input all final answers two decimal places out.) If Mike can only find an annual return of 8% compounded on a monthly basis and can only deposit $400...

Mike is currently 35 years old and plans on retiring at the age of 65 ideally...

Mike is currently 35 years old and plans on retiring at the age of 65 ideally Mike would like to retire with one million dollars. a. How much would Mike have to deposit on an annual basis to reach his goal if he can get return of 12% compounded annually.? b. How much would mike deposit on a monthly basis to reach his goal if he can get a return of 10% compounded monthly? c. If mike can find an...

Rick is currently 35 years old. He plans to retire at age 65 and hopes to...

Rick is currently 35 years old. He plans to retire at age 65 and hopes to live to age 85. His labour income is $50,000 per year, and he intends to maintain a constant level of real consumption spending over the next 50 years. Assuming a real interest rate of 3% per year, no taxes, and no growth in real labour income, what is the value of Rick’s human capital? ****I would like this broken down step by step, and...

1. George is currently 30 years old, plans to retire at the age of 65 and...

1. George is currently 30 years old, plans to retire at the age of 65 and to live to the age of 85. His labor income is $25,000 per year, and he intends to maintain a constant level of real consumption spending over the next 55 years. Assume no taxes, no growth in real salary, and a real interest rate of 3% per year. a. What is the value of George’s human capital? b. What is his permanent income? c....

Jack and Jill are 41 years old and plan on retiring at age 65 and expect...

Jack and Jill are 41 years old and plan on retiring at age 65 and expect to live until age 95. Theycurrently earn $200,000 and expect to need $100,000 in retirement. They also expect that SocialSecurity will provide $24,000 of benefits in today’s dollars at age 65. They are saving $20,000 each intheir 401(k) plans and IRAs. Their son, Parker, is expected to go to college in 10 years. They want tosave for Parker’s college education, which they expect will...

You plan on retiring in 40 years at age 65. You currently have $20,000 (graduation present) that...

You plan on retiring in 40 years at age 65. You currently have $20,000 (graduation present) that you are going to deposit today in a bond that will yield 10% a year for the entire 40 years (traditional IRA). At age 40 you will receive an inheritance from your parents of approximately $20,000 which you will invest in mutual funds that will yield 9% a year for 25 years (Traditional IRA). The current discount rate is 5.5%, the risk-free rate is 3% and...

A client, 35 years old, who would like to retire at age 65 (30 years from...

A client, 35 years old, who would like to retire at age 65 (30 years from today). Her goal is to have enough in her retirement account to provide an income of $75,000 a year, starting a year after retirement or year 31, for 25 years thereafter. She had a late start on saving for retirement, with a current balance of $10,000. To catch up, she is now committed to saving $5,000 a year, with the first contribution a year...

1. You are now 50 years old and plan to retire at age 65. You currently...

1. You are now 50 years old and plan to retire at age 65. You currently have a stock portfolio worth $150,000, a 401(k) retirement plan worth $250,000, and a money market account worth $50,000. Your stock portfolio is expected to provide annual returns of 12 percent, your 401(k) investment will earn 9.5 percent annually, and the money market account earns 5.25 percent, compounded monthly. (12 points) a. If you do not save another penny, what will be the total...

You are 30 years old and want to retire at the age of age 65 and...

You are 30 years old and want to retire at the age of age 65 and expect to live another 25 years. On the day you retire, you want to have $900,000 in your retirement savings account. a) 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? b) You're retired with $900,000 and you have 25 more years. You...

Subjects