Excel Project: Today, you retire with $2 million in the bank. Starting today, and for each...

Excel Project:

Today, you retire with $2 million in the bank. Starting today, and for each of the next 30 years, you withdraw $100,000. If you earn 4 percent per year on your investments, how much money will you have after the last withdrawal?

Solutions

Expert Solution

Form the question it is clear that the person withdraws $100,000 on the same day when the money is deposited in the bank. And we assume that the interest is paid at the end of the year.

For the first year initial amount in the bank will be 1,900,000 as the person withdraws 100,000 on the very first day.

After the completion of 1 year the interest will be added to the account @ 4%. (principal_amount*1.04)

For every other year, the person withdraws 100,000 on the first day and the updated amount in the bank is given by left column of the table.

After the interest is paid on completion of each year, the updated amount is shown in the right column.

So the person will withdraw $653,961.494 at the end of 30 years.(after the interest is added for the 30th year)

venereology answered 1 year ago

Next > < Previous

Related Solutions

You deposit $5,000 in the bank each year starting today. The last deposit will be in...

You deposit $5,000 in the bank each year starting today. The last deposit will be in exactly 20 years’ time. How much will there be in the bank when you retire in exactly 45 years? EAR = 10%

You want a million dollars in the bank when you retire. Save $5000 this year and...

You want a million dollars in the bank when you retire. Save $5000 this year and increases by 2% every subsequent year in a bank that offers 5% interest. How many years before you can retire?

You are planning to invest in a project which costs $40 million today. The project will...

You are planning to invest in a project which costs $40 million today. The project will produce returns of $4 million per year for five years and the scrap value will be $20 million. That is, you will receive $4 million at the end of the year, for each of the next five years, and you will receive $20 million at the end of the fifth year. Question (a) [2 marks] What is the net present value of the project...

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)...

You want to retire 35 years from today with $2.5 million in your Individual Retirement Account...

You want to retire 35 years from today with $2.5 million in your Individual Retirement Account (IRA). You currently have 100,000.00 saved in your IRA which is earning 9.00% annually. What amount would you need to save and deposit at the beginning of each quarter to achieve your retirement goal? Note that you are making the deposits quarterly, not annually.

A project is worth $18 million today. One year from today, the project will be worth...

A project is worth $18 million today. One year from today, the project will be worth $22 million with high demand and $14 million with low demand. It will also be possible to sell the project off for $16 million one year from today. Using risk neutral probabilities, which of the following is closest to the value of the abandonment option if the risk-free rate is 4% per year? $0.79 million $1.58 million $2.71 million $3.45 million

You want to have $2 million in real dollars in an account when you retire in...

You want to have $2 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 13 percent and the inflation rate is 5 percent. What real amount must you deposit each year to achieve your goal? Multiple Choice • $8,531.47 • $1,972.96 • $8,958.04 • $8,872.73 • $8,104.90

a) You are 21 and want to retire at the age of 60. Starting on your...

a) You are 21 and want to retire at the age of 60. Starting on your retirement date you’d like to have an annuity paying $25,000 per year for 25 years. Your uncle is giving you $10,000 when you graduate. How much would you need to save every year from next year to retirement to finish funding this annuity? Interest rates are 6%.

a) You would like to retire 30 years from now with $2 million dollars. If you...

a) You would like to retire 30 years from now with $2 million dollars. If you get a big inheritance now, how much money do you need to deposit now so that it grows to $2 million assuming an annual interest rate of 6% with interest compounded monthly? b) Suppose in question a) that instead of a one-time payment, you want to save monthly for your retirement. How much should your monthly savings be with interest compounded monthly?

Subjects