A) You begin placing $4,000 into an Individual Retirement Account at age 23 hoping to retire...

A) You begin placing $4,000 into an Individual Retirement Account at age 23 hoping to retire at age 60. If you can earn 8% on your investment, how much will you have at when you would like to retire?

B) You have won a $500 million Lotto and are given the choice of receiving $19,230,769.23 every year for the next 26 years, or receiving one lump sum payment. If the discount rate is 4%, how much would the lump sum payment be?

Expert Solution

1.
=Future value of annuity=Deposits/rate*(1+rate)^n-1)=4000/8%*(1.08^38-1)=881263.781584357

2.
=Present value of annuity=Payments/rate*(1-1/(1+rate)^n)
=19230769.23/4%*(1-1/1.04^26)=307360945.69131

jeff jeffy answered 2 years ago

You begin saving for retirement at age 25, and you plan to retire at age 60....

You begin saving for retirement at age 25, and you plan to retire at age 60. You want to deposit a certain amount each month into an account that pays an APR of 3% compounded monthly. Make a table that shows the amount you must deposit each month in terms of the nest egg you desire to have when you retire. (Round your answers to the nearest cent.) Nest egg size Needed deposit $100,000 $ $200,000 $ $300,000 $ $400,000...

You annually invest $1,000 in an individual retirement account(IRA) starting at the age of 30...

You annually invest $1,000 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 15 years. Your twin sister does the same starting at age 45 and makes the contributions for 15 years. Both of you earn 6 percent annually on your investment.What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar.Amount on your account:...

You annually invest $2,000 in an individual retirement account (IRA) starting at the age of 25...

You annually invest $2,000 in an individual retirement account (IRA) starting at the age of 25 and make the contributions for 10 years. Your twin sister does the same starting at age 40 and makes the contributions for 25 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 65? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar. Amount on...

1. You annually invest $1,500 in an individual retirement account (IRA) starting at the age of...

1. You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 20 and make the contributions for 15 years. Your twin sister does the same starting at age 35 and makes the contributions for 30 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 65? Round your answers to the nearest dollar. Amount on your account: $ Amount on your sister's account: $ ...

You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 30...

You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 15 years. Your twin sister does the same starting at age 45 and makes the contributions for 15 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar. Amount on...

You want to retire 35 years from today with $2.5 million in your Individual Retirement Account...

You want to retire 35 years from today with $2.5 million in your Individual Retirement Account (IRA). You currently have 100,000.00 saved in your IRA which is earning 9.00% annually. What amount would you need to save and deposit at the beginning of each quarter to achieve your retirement goal? Note that you are making the deposits quarterly, not annually.

You plan to graduate at age 23 and start saving for retirement at age 24. You...

You plan to graduate at age 23 and start saving for retirement at age 24. You save as follows: Age 24-35 $6,000 per year Age 36-50 $5,000 per year Age 51-60 $2,000 per year Age 61-65 $8,000 per year How much money will you be able to withdrawal from ages 66-90 as regular amounts assuming all money earns 6.5% interest? Please use excel and show equations

Suppose you start saving for retirement by depositing $4,000 EVERY YEAR into your retirement account. If...

Suppose you start saving for retirement by depositing $4,000 EVERY YEAR into your retirement account. If your annual return is 8%, how much will you have in 45 years? How much would you have if all deposits were made on the FIRST of the year (as opposed to the last day of the year)? (please solve by hand and not excel)

At age 25, Katharine starts to invest money into an Individual Retirement Account (IRA). If she...

At age 25, Katharine starts to invest money into an Individual Retirement Account (IRA). If she decides to save $4000 every year and invest the amount into the IRA account at the end of each year for 30 years, how much will the account balance when she is 55 years old? Assume the IRA account generate 7.75% interest rate per year, A) 46,114. B) 120,000. C) 375,614 D) 432,868. E) 462,114. Assume that you win a lottery and have the...

How important is it for an individual to begin investing early for retirement? Do you think...

How important is it for an individual to begin investing early for retirement? Do you think an individual should seek high-return investments when they are still relatively young? Original response please

Question