Question

You are trying to decide how much to save for retirement. Assume you plan to save $ 5000 per year with the first investment made one year from now. You think you can earn 11.0​% per year on your investments and you plan to retire in  37 ​years, immediately after making your last $ 5000 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing $ 5 comma 000 per​ year, you wanted to make one​ lump-sum investment today for your retirement that will result in the same retirement​ saving, how much would that lump sum need to​ be? c. If you hope to live for 26 years in​ retirement, how much can you withdraw every year in retirement​ (starting one year after​ retirement) so that you will just exhaust your savings with the 26th withdrawal​ (assume your savings will continue to earn 11.0​% in​ retirement)? d.​ If, instead, you decide to withdraw $ 423,000 per year in retirement​ (again with the first withdrawal one year after​ retiring), how many years will it take until you exhaust your​ savings? (Use​ trial-and-error, a financial​ calculator: solve for​ "N", or​ Excel: function​ NPER) e. Assuming the most you can afford to save is $ 1,000 per​ year, but you want to retire with $ 1,000,000 in your investment​ account, how high of a return do you need to earn on your​ investments? (Use​ trial-and-error, a financial​ calculator: solve for the interest​ rate, or​ Excel: function​ RATE)

a. How much will you have in your retirement account on the day you​ retire

The amount in the retirement account in 37 years would be​ ?(Round to the nearest​ cent.)

b. If, instead of investing $5,000 per​ year, you wanted to make one​ lump-sum investment today for your retirement that will result in the same retirement​ saving, how much would that lump sum need to​ be.You will need to make one lump sum investment today?​(Round to the nearest​ cent.)

c. If you hope to live for 26 years in​ retirement, how much can you withdraw every year in retirement​ (starting one year after​ retirement) so that you will just exhaust your savings with the 26th withdrawal​ (assume your savings will continue to earn 11.0​% in​ retirement)?

The amount you can withdraw every year in retirement is (Round to the nearest​ cent.)

d. If, instead, you decide to withdraw $423,000 per year in retirement​ (again with the first withdrawal one year after​ retiring), how many years will it take until you exhaust your​ savings? (Use​ trial-and-error, a financial​calculator: solve for​ "N", or​ Excel: function​ NPER)

You will exhaust your savings in years? (Round to two decimal​ places.)

e. Assuming the most you can afford to save is $1,000 per​ year, but you want to retire with $ 1,000,000 in your investment​ account, how high of a return do you need to earn on your​ investments? (Use​ trial-and-error, a financial​ calculator: solve for the interest​ rate, or​ Excel: function​ RATE)

You will need a return of ?%. ​(Round to two decimal​ places.)

Answer 1