Question

In: Finance

Consider that you are 40 years old and have just changed to a new job. You...

Consider that you are 40 years old and have just changed to a new job. You have $141,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $6,300 each year into your new employer’s plan.

  

If the rolled-over money and the new contributions both earn an 7 percent return, how much should you expect to have when you retire in 25 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Solutions

Expert Solution

Value of investments in 25 Years $ 11,63,736.94

Working:

Step-1:Calculation of Future Value of $ 141,000
Future Value of Present Value = Present Value x Fuure Value of 1
= $          1,41,000 x             5.42743
= $    7,65,268.00
Workking:
Future Value of 1 = (1+i)^n Where,
= (1+0.07)^25 i 7%
=    5.42743 n 25
Step-2:Calculation of future value of annual contribution
Future Value of annual contribution = Annual contribution x future value of annuity of 1
= $ 6,300 x 63.24904
= $ 3,98,468.94
Working:
Future Value of annuity of 1 = (((1+i)^n)-1)/i Where,
= (((1+0.07)^25)-1)/0.07 i 7%
=             63.24904 n 25
Step-3:Calculation of future value of total investment
Future Value of total Investments = $    7,65,268.00 + $ 3,98,468.94
= $ 11,63,736.94

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Consider that you are 45 years old and have just changed to a new job. You...
Consider that you are 45 years old and have just changed to a new job. You have $159,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $8,100 each year into your new employer’s plan. If the rolled-over money and the new contributions both earn an 8 percent return, how much should you expect to have when you retire in 20 years? (Do not...
Consider that you are 35 years old and have just changed to a new job. You...
Consider that you are 35 years old and have just changed to a new job. You have $146,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $6,800 each year into your new employer’s plan. If the rolled-over money and the new contributions both earn a return of 6 percent, how much should you expect to have when you retire in 30 years?
Assume that you have 40 years until retirement and have just started your first job. Once...
Assume that you have 40 years until retirement and have just started your first job. Once you retire, you anticipate that you will live for 30 additional years. Assume that you will require $100,000 per year to support yourself in retirement. All investments that you make will go into and stay an account that returns 7.8% per year (however much you have at retirement will sit that account and continue to accrue interest on the remaining balance. How much will...
20. Assume that you just graduate and get a job. You will work for 40 years...
20. Assume that you just graduate and get a job. You will work for 40 years and save each year before you retire. During retirement you plan to receive a pension annuity of $100,000 each year for another 40 years. How much money will you need to have at the moment you retire? How much money do you need to save every year before retirement? Assume the interest rate is always 8%. Before retirement, you deposit your saving at the...
You have just turned 25 years old, and accepted a job offer. Now you must decide...
You have just turned 25 years old, and accepted a job offer. Now you must decide how much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 8% per year. You cannot make withdrawals until you retire on your 60 th birthday. After that, you can make withdrawals as you see fit. You estimate that to live comfortably in retirement, you will need $80,000 per year, starting at the end of...
You are 35 years old. You have just finished your B.A studies and found a new...
You are 35 years old. You have just finished your B.A studies and found a new and rewarding job. You decided that it is time to set up a retirement plan. You estimate that you can deposit $1,000 in real terms each month until your retirement. You want to retire at the age of 60. You contacted a retirement agent and received the following offer: an inflation-linked plan (a real plan) that pays an annual stated real interest rate of...
Problem 4 and 5-1 Future Value Consider that you are 35 years old and have just...
Problem 4 and 5-1 Future Value Consider that you are 35 years old and have just changed to a new job. You have $83,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $3,900 each year into your new employer’s plan.    If the rolled-over money and the new contributions both earn a 7 percent return, how much should you expect to have when...
You have just turned 22 years old, received your bachelor's degree, and accepted your first job....
You have just turned 22 years old, received your bachelor's degree, and accepted your first job. Now you must decide how much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your 65th birthday. After that, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65....
You have just turned 22 years old, recieved your bacheor's degree, and accepetd your first job,...
You have just turned 22 years old, recieved your bacheor's degree, and accepetd your first job, Now you must decide how much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7.5% per year. You cannot make withdrawls until you retire on your 65th birthday. After that, you can make withdrawls as you see fit. You decide that you will plan to live to 100 and work until you turn 65....
You have just turned 22 years​ old, received your​ bachelor's degree, and accepted your first job....
You have just turned 22 years​ old, received your​ bachelor's degree, and accepted your first job. Now you must decide how much money to put into your retirement plan. The plan works as​ follows: Every dollar in the plan earns 6.9 % per year. You cannot make withdrawals until you retire on your 65th birthday. After​ that, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT