Question
In: Finance
Your 40-year clients, who have a 12-year old child, plan to retire at the age of...
Your 40-year clients, who have a 12-year old child, plan to retire at the age of 62. Assume 360-day year and 30-day month in your calculations.
They have a current salary at an annual rate of $144,000, being paid equally at the end of each month.
They expect a 3% raise in their salary every year until they retire.
They deposit 12% of their monthly salary to their 401(k) account that generates an annual rate of return of 10%, compounded daily.
In addition, their employer matches their contribution with 5% of their salary to the same 401(k) account.
Q1 Determine the cash flows pattern of the total monthly contributions to the 401(k)
account within each year; and calculate and explain precisely your choice of interest rate, i.e., EAR/EPR/PER,
used in your analysis. And calculate the year-end value of the 401(k) contributions for each year.
Q2 Determine the pattern of the year-end values of the 401(k) contributions across years;
and calculate and explain precisely your choice of interest rate, i.e., EAR/EPR/PER, used in your analysis. And calculate their 401(k) account balance upon their retirement.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Your 40-year clients, who have a 12-year old child, plan to retire at the age of...
Your 40-year clients, who have a 12-year old child, plan to
retire at the age of 62. Assume 360-day year and 30-day month in
your calculations.
They have a current salary at an annual rate of $144000, being
paid equally at the end of each month. They expect a 3% raise in
their salary every year until they retire. They deposit 12% of
their monthly salary to their 401(k) account that generates an
annual rate of return of 10%, compounded...
Your 40-year clients, who have a 12-year old child, plan to retire at the age of...
Your 40-year clients, who have a 12-year old child, plan to
retire at the age of 62. Assume 360-day year and 30-day month in
your calculations.
They have a current salary at an annual rate of $144000, being
paid equally at the end of each month. They expect a 3% raise in
their salary every year until they retire. They deposit 12% of
their monthly salary to their 401(k) account that generates an
annual rate of return of 10%, compounded...
You are currently 40 years old and intend to retire at age 60. To make your...
You are currently 40 years old and intend to retire at age 60.
To make your retirement easier, you intend to start a retirement
account. At the END of each of years, you will deposit some money
to your retirement account till your retire. You expect the account
will earn 7% per year. After retirement at age 60, you want to
withdraw $10,000 from your retirement account at the END of each
year for 10 years. How much money should...
You have a couple who are 31 years old, and want to retire at the age...
You have a couple who are 31 years old, and want to retire at
the age of 67. Knowing that, the couple has a combined annual
income of $95,000 today.
1. They are curious to find out if college costs $90,000 per
year when their child gets into college in 19 years, how much is
the total cost of a college education (that lasts for 4 years) in
today’s dollars if the cost of money is 8%? Assume you pay...
You are 40 years old and want to retire at age 65. Each year, starting one...
You are 40 years old and want to retire at age 65. Each year,
starting one year from now, you will deposit an equal amount into
an investment account that pays 4% interest. The last deposit will
be on your 65th birthday. On your 65th birthday, you will switch
the accumulated savings into a safer bank account that pays only
4.2% interest. You will withdraw your annual income of $110,000 at
the end of that year (on your 66th birthday)...
You are 40 years old and want to retire at age 60. Each year, starting one...
You are 40 years old and want to retire at age 60. Each year,
starting one year from now, you will deposit an equal amount into
an investment account that pays 4.6% interest. The last deposit
will be on your 60th birthday. On your 60th birthday, you will
switch the accumulated savings into a safer bank account that pays
only 4.2% interest. You will withdraw your annual income of
$130,000 at the end of that year (on your 61st birthday)...
Your clients, both just turned 40, will retire when they turn 62. They have a current...
Your clients, both just turned 40, will retire when they turn
62. They have a current salary at an annual rate of ($10,000*salary
scalar + $100,000), being paid equally at the end of each month.
They expect a 3% raise in their salary every year until they
retire. They deposit 12% of their monthly salary in their 401(k)
account that generates an annual rate of return of 10%, compounded
daily. In addition, their employer matches their contribution with
5% of...
Connor is not married and supports Connor's 12 year old child who lives with Connor and...
Connor is not married and supports Connor's 12 year old child
who lives with Connor and has gross income of $2,650 (the child's
gross income). Connor works as a self-employed realtor and earned
commissions of $146,000 during 2019. Connor’s business expenses
were $18,900 and the only other income was interest of $7,300.
Connor’s other information follows:
Contribution to solo(k) retirement
plan
$ 5,500
Loss on sale of Alphatech stock held 2
years
-3,200
Mortgage interest on primary residence 6,950...
A couple will retire in 40 years; they plan to spend about $37,000 a year in...
A couple will retire
in 40 years; they plan to spend about $37,000 a year in retirement,
which should last about 20 years. They believe that they can earn
7% interest on retirement savings.
a. If
they make annual payments into a savings plan, how much will they
need to save each year? Assume the first payment comes in 1 year.
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
b.
How would the answer to part...
A couple will retire in 40 years; they plan to withdraw $39,000 a year in retirement,...
A couple will retire in 40 years; they plan to withdraw $39,000
a year in retirement, and they
will make 20 withdraw. They believe that they can earn 8%
interest on the retirement
savings.
- If they make annual deposit into their retirement savings, how
much will they need to save
each year? Assume the first deposit comes at the end of the
first year, and the first withdraw
comes at the end of year 41.
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