Question
In: Finance
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 4.8%. Assume that the annual expected inflation is 2.43% (for the entire period).
1. According to the data you have, how much money, in real terms, will you have in your retirement plan once you retire?
2. According to the data you have, can you estimate how much money, in nominal terms (in cash), will you have in your retirement plan once you retire?
3. Assuming that the actual inflation is the same as expected one, what is your 60th nominal contribution to the retirement plan (the amount you deposit at the end of year five, in cash)?
4. You estimate that you will live until the age of 90. How much money, in real terms, will you be able to withdraw each month from the age of 60 until the age of 90?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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...
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...
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...
You just finished calculating the NPV of project A and found it to be $49,242. A...
You just finished calculating the NPV of project A and found it
to be $49,242. A concurrent project, which will use the same
resources as project A is now before you as well. This is project
B, which will require a $2M investment in an asset that will have a
$1M salvage value at the end of the project. A total of $170,000
was invested in the consulting and research leading to the
marketability of the product. Project B will...
You just finished calculating the NPV of project A and found it to be $49,242. A...
You just finished calculating the NPV of project A and found it
to be $49,242. A concurrent project, which will use the same
resources as project A is now before you as well. This is project
B, which will require a $2M investment in an asset that will have a
$1M salvage value at the end of the project. A total of $170,000
was invested in the consulting and research leading to the
marketability of the product. Project B will...
You just finished calculating the NPV of project A and found it to be $49,242. A...
You just finished calculating the NPV of project A and found it
to be $49,242. A concurrent project, which will use the same
resources as project A is now before you as well. This is project
B, which will require a $2M investment in an asset that will have a
$1M salvage value at the end of the project. A total of $170,000
was invested in the consulting and research leading to the
marketability of the product. Project B will...
Problem 39: You have just turned 30 years old, have just received your MBA, and have...
Problem 39:
You have just turned 30 years old, have just received your MBA,
and have accepted your first job. Now you must decide how much
money to put into your RRSP. Your RRSP works as follows: Every
dollar in the plan earns 7% per year. You cannot make withdrawals
until your 65th birthday. After that point, you can make
withdrawals as you see fit. You decide that you will plan to live
to 100 and work until you turn...
You are just 25 years old and you have $50,000 in your retirement saving accounts. You...
You are just 25 years old and you have $50,000 in your
retirement saving accounts. You expect to retire at the age of 65
(work for 40 more years) and expect to live for another 25 years
after your retirement. On the day you retire, you want to have
enough money in our retirement saving accounts such that you are
able to draw $7,000 per month for 25 years. You are conservative in
your estimate of interest rate and expect...
You have just turned 25 years old and decide to start saving for your retirement. You...
You have just turned 25 years old and decide to start saving for
your retirement. You plan to save $5,000 at the end of each year
(so the first deposit will be one year from now), and will make the
last deposit when you retire when you turn 65 (that is, 40 deposits
in total. Suppose your pension fund earns 8% per year on your
retirement savings.
a) How much will you have saved for retirement by the time you...
You are now 25 years old, and have just started working. Your salary for this year...
You are now 25 years old, and have just started working. Your
salary for this year (i.e., the next 12 months) is $60,000 a year
(payable at the end of the year). You expect your salary to
increase at the (nominal) rate of 3% per year. You want to retire
on your 60 birthday (i.e., 35 years from now). During retirement,
you will be happy if you can have $75,000 per year. You expect to
live until you are 90...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Delineate the various types of drug tolerance. Are they the same? What are their significant differences,...
- Consider the titration of 30.0 mL of 0.030 M NH3 with 0.025 M HCl. Calculate the...
- All airplane passengers at the Lake City Regional Airport must pass through a security screening area...
- Consider again the company making tires for bikes is concerned about the exact width of their...
- A 2000kg large boxcar that rolls without friction is sitting at rest. It is shot by...
- In a recent Wall Street Journal article (“The Price You Pay for Water at the Airport,”...
- Q. Spherical glass particles (12 mm diameter and 2500 kg/m 3 density) and spherical metal particles...
ADVERTISEMENT