Tom Hagen just graduated from OSU and has taken a job in Dallas, TX. During his...

Tom Hagen just graduated from OSU and has taken a job in Dallas, TX. During his first week with his new company, Tom attends a Human Resources seminar where he chooses a health care plan, life insurance, and a retirement savings plan. The discussion about retirement plans makes Tom think about how much he will need in retirement and how much he can save. Assume Tom will work and save for 40 years. If he put $300 per month into a savings account, paying 1% annual interest (compounded monthly), how much will he have when he retires in 40 years? Assume deposits occur at the end of each month. DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR.

Now, assume Tom invests $300 per month earning 8% annual interest (compounded monthly), how much will he have when he retires in 40 years? Assume deposits occur at the end of each month. DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR.

Now, assume Tom invests $300 per month earning 12% annual interest (compounded monthly), how much will he have when he retires in 40 years? DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR.

What if Tom decides to delay saving for retirement for 10 years so he can travel and buy his dream car? How much will Tom have when he retires if he waits 10 years before funding his retirement (assume he saves $300 per month for 30 years at 8% annual interest – compounded monthly)? Assume deposits occur at the end of each month. DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR.

Solutions

Expert Solution

Monthly payments $300 each:

Retirement fund available in 40 years at 1%= 176,967

Retirement fund available in 40 years at 8%= 1,047,302

Retirement fund available in 40 years at 12%= 3,529,432

Retirement fund available in 30 years at 8%= 447,108

Calculation as below:

jeff jeffy answered 1 year ago

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