Question
In: Finance
Your retirement account (which is expected to yield 7.24% return per year) has a current balance...
Your retirement account (which is expected to yield 7.24% return per year) has a current balance of $50,000. How much would need to invest each year in order to accumulate a total of $1,000,000 in 30 years? Show the formula and steps along with explanation
Solutions
Expert Solution
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Future value of 50,000=50,000*(1.0724)^30
=50,000*8.14149498
=$407074.749
Future value of annuity=Annuity[(1+rate)^time period-1]/rate
=Annuity[(1.0724)^30-1]/0.0724
=Annuity*98.6394334
Hence 1,000,000=407074.749+Annuity*98.6394334
Annuity=(1,000,000-407074.749)/98.6394334
=$6011.04(Approx)
jeff jeffy answered 2 years agoRelated Solutions
Parker's retirement account has a current balance of $25,000. If he adds $600 per month to...
Parker's retirement account has a current balance of $25,000. If
he adds $600 per month to the account for the next 30 years, how
much will the account be worth? (Assume an interest rate of 11.00%
per year).
Group of answer choices
$688,310
$241,000
$2,350,414
$1,682,711
Jose, age 25, currently saves $13500 per year in his retirement account which is expected to...
Jose, age 25, currently saves $13500 per year in his retirement
account which is expected to earn 5% return. Jose is planning to
retire at 62 and needs to fund his retirement upto age, 85. He has
estimated that the annual amount needed during retirement would be
$47,000 in today's dollar terms. The inflation rate is expected to
be 1.5%. Calculate the shortfall (if any) in his retirement account
at the beginning of retirement.
You plan to retire one year from now.Your current balance in your tax-deferred retirement account...
You plan to retire one year from now.
Your current balance in your tax-deferred retirement account is
$730,798, and you don't plan additional contributions. You plan to
draw down retirement account by taking equal annual payouts for 30
years. When you draw a payout, you plan to deposit it in a checking
account to cover expenses for the upcoming year. Thus, on the day
that you retire, you will draw a payout to cover your first year in
retirement; one...
2. TSMC stock has a volatility of 25% with expected return 8% per year. The current...
2. TSMC stock has a volatility of 25% with expected return 8%
per year. The current stock price is $100 per share. The risk-free
interest rate is 2%. What is the Black-Scholes value of an
at-the-money European put with 1 year maturity?
(Expected rate of return and current yield) Time Warner has bonds that are selling for $1,184....
(Expected rate of return and current yield)
Time Warner has bonds that are selling for $1,184. The coupon
interest rate on the bonds is 9.25 percent and they mature in 18
years. What is the yield to maturity on the bonds? What is the
current yield?
a. The yield to maturity on the bond is _______%. (Round
to two decimal places.)
Queen limited has an investment proposal which is expected to yield a return of 12%. The...
Queen limited has an investment proposal which is expected to
yield a return of 12%. The CEO is contemplating whether to go ahead
with the proposal or not. Following is the capital structure of the
firm as per book value weights. Equity capital - 1.5 crore shares
of Rs. 10 each 12% preference capital, 1 lakh shares of Rs. 100
each, 11% term loan of Rs. 12.5 crore, 11.5% debentures - 10 lakh
debentures of Rs. 100 each and retained...
What are the total return, expected dividend yield, and capital gains yield for the first year?
ABC Company just paid a dividend (Do) of $1.10. Due to a new
product being introduced to the market, ABC expects to achieve a
supernormal annual growth rate of 15% for the next four years.
After that, growth is expected to return to the long-run constant
rate of 8%. Investors require a 12% return on this stock.Question 1 : What are the total return, expected dividend yield,
and capital gains yield for the first year?Question 2 : What are the...
Find the final amount in the following retirement account, in which the rate of return on...
Find the final amount in the following retirement account, in
which the rate of return on the account and the regular
contribution change over time.
$447 per month invested at 4%, compounded monthly, for 5
years; then $770 per month invested at 7%, compounded monthly,
for 5 years.
What is the amount in the account after 10 years?
Find the final amount in the following retirement account, in which the rate of return on...
Find the final amount in the following retirement account, in
which the rate of return on the account and the regular
contribution change over time.
$561 per month invested at 5%, compounded monthly, for 3
years; then $781 per month invested at 6%, compounded monthly,
for 3years.
What is the amount in the account after 6 years?
Find the final amount in the following retirement account, in which the rate of return on...
Find the final amount in the following retirement account, in
which the rate of return on the account and the regular
contribution change over time.
$481 per month invested at 5%, compounded monthly, for 5
years; then $711 per month invested at 7%, compounded monthly,
for 5 years.
What is the amount in the account after 10 years?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Discuss the significance of a proposal What elements do you think are needed for the proposal...
- 1) Given the following equations: QD = 5,000 + 0.5 I + 0.2 A -...
- How has the Supreme Court's Citizens United decision changed campaigns in America? (long answer is appreciated...
- You are a Derivatives Trader at a major Broker-Dealer. At the end of the week you...
- What are the two reasons that limit the ability of correlational studies to provide information on...
- Suppose that 20 monthly payments of $100 each are followed by 30 monthly payments of $200...
- D. Explain what it means for recommendations to be specific and actionable. E. Discuss how charts...
ADVERTISEMENT