Question

In: Economics

You wish to retire in 30 years. You think that you will need an income $5,000...

You wish to retire in 30 years. You think that you will need an income $5,000 every month from an ordinary                               

          annuity. The current interest rate is 6% (compounded monthly). You wish to receive that payment for 23                

          years after retirement.

  1. What lump sum in 20 years will you require to purchase that annuity.
  2. How much must you contribute monthly starting today to be able to buy that annuity (6% compounded     monthly)
  3. If you estimate the inflation rate will be 4% per year, what would the purchasing power of $5,000 every month   in 30 years be in todays money.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

You wish to retire in 30 years’ time and draw an annual income of $25,000 at...
You wish to retire in 30 years’ time and draw an annual income of $25,000 at the end of each year for a period of 25 years. How much money will you need to invest now (to the nearest dollar) if you can earn 8% on your investments. Group of answer choices A. $11,787 B. $118,609 C. $26,521 D. $266,869 At what interest rate would you need to earn from an investment in order to accumulate $17,632 after 5 years...
You will retire 20 years from now, and you think you will need an income of...
You will retire 20 years from now, and you think you will need an income of $6,000 per month for 20 years after you retire. You will begin saving for retirement by saving $700 per month for the next 10 years. How much will you have to save each month in the 10 years after that to have enough to meet your retirement goal? The interest rate is 9% APR. Round your answer to the nearest dollar.
You will retire 20 years from now, and you think you will need an income of...
You will retire 20 years from now, and you think you will need an income of $6,000 per month for 20 years after you retire. You will begin saving for retirement by saving $700 per month for the next 10 years. How much will you have to save each month in the 10 years after that to have enough to meet your retirement goal? The interest rate is 9% APR. Round your answer to the nearest dollar.
You plan to retire in 30 years. Beginning in 31 years from now you wish to...
You plan to retire in 30 years. Beginning in 31 years from now you wish to have an annual retirement income of $80,000 / year as measured in today’s dollars. The inflation rate is assumed to be 2.5%. Each year in retirement you wish to have your retirement income grow by 3% per year. You plan on living for 35 years in retirement. Starting in one year from now you are going to make annual deposits into a savings account....
You are 30 years old today. You wish to retire at age 65. How much money...
You are 30 years old today. You wish to retire at age 65. How much money must you deposit at the end of each year so that when you retire at age 65, you will be able to withdraw $2,500 at the end of each month until age 85? Assume you can earn interest at the rate of 5.5% compounded daily during the entire period from age 30 to 85.
You are 30 years old today. You wish to retire at age 65. How much money...
You are 30 years old today. You wish to retire at age 65. How much money must you deposit at the end of each year so that when you retire at age 65, you will be able to withdraw $2,500 at the end of each month until age 85? Assume you can earn interest at the rate of 5.5% compounded daily during the entire period from age 30 to 85. I do not understand at all, so if you could...
You wish to retire in 30 years with retirement savings equal to $750,000. How much should...
You wish to retire in 30 years with retirement savings equal to $750,000. How much should you put away each month if the annual interest rate is 9.75%? Round to the nearest 0.01.
Suppose you wish to retire forty years from today. You determine that you need RM 50,000...
Suppose you wish to retire forty years from today. You determine that you need RM 50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% per year on your retirement funds and that you will need funds up to and including your 25th birthday after retirement a) How much must you deposit in an account today so that you have enough funds for retirement?...
Suppose you wish to retire forty years from today. You determine that you need RM 50,000...
Suppose you wish to retire forty years from today. You determine that you need RM 50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% per year on your retirement funds and that you will need funds up to and including your 25th birthday after retirement a) How much must you deposit in an account today so that you have enough funds for retirement?...
You are planning on saving for retirement. You wish to retire in 40 years, and you...
You are planning on saving for retirement. You wish to retire in 40 years, and you would like to withdraw an annual sum each year to live on starting 40 years from today - You have determined that you will need $100,000 to live on (in today’s dollars) - You estimate inflation (cost of living) to be 3% - Your estimated rate of return pre-retirement is 10%; in retirement 7% Assume your life expectancy once retired is another 20 years....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT