NOTE: Provide a format and show your work (example: N = 6, PV = XXX, I = X%, etc.) It is now the year 2048 and you have amassed a retirement fund of $1.2 million. You want to retire in 13 years (year 2061). At the time, you plan to start withdrawing $20,000 per month. If your investment fund is invested at a 6.0 percent rate, how many months will it last you once you start to withdraw the money? (Assume monthly compounding. Do not round intermediate calculations and round your final answer to 2 decimal places.) Hint: draw a timeline to help visualize the problem.

NOTE: Provide a format and show your work (example: N = 6, PV = XXX, I = X%, etc.) It is now the year 2048 and you have amassed a retirement fund of $1.2 million. You want to retire in 13 years (year 2061). At the time, you plan to start withdrawing $20,000 per month. If your investment fund is invested at a 6.0 percent rate, how many months will it last you once you start to withdraw the money? (Assume monthly compounding. Do not round intermediate calculations and round your final answer to 2 decimal places.) Hint: draw a timeline to help visualize the problem.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 23P

See similar textbooks

Similar questions

Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Your retirement fund's balance is $50,000 right now. You want to retire in 30 years with $1,000,000. You add $6000 annually, but what interest rate do you need to earn in order to reach your goal? please calculate manually
Suppose you are 30 years old and would like to retire at age 60. Furthermore, you would like to have a retirement fund which you can draw an income of $1250,00 per year- forever! How much would you need to deposit each month to do this? Assume a constant APR of 6% and that compounding and payment periods are the same. To draw $125000 per year there must be $____ in your saving account when you retire.
In planning for your retirement, you would like to withdraw $40,000 per year for 18 years. The first withdrawal will occur 20 years from today. Click here to access the TVM Factor Table Calculator Part a What amount must you invest today if your return is 10% per year? $
(Calculating Annuities) You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a month in a stock account and $300 a month in a bond account. The return of the stock account is expected to be 11 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a 9 percent return. How much can you withdraw each month from your account assuming a 25-year withdrawal period?
You have just made your first $5,500 contribution to your retirement account. Assuming you earn a return of 10 percent per year and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? (Does this suggest an investment strategy?) Input area: Present value Interest rate Number of years Number of years (Use cells A6 to 89 from the given information to complete this question. Your answer should be a positive value.) Output area: $5,500 10% 45 35 Future value Future value $
Suppose you are planning for retirement. At thebeginning of this year and each of the next 39 years,you plan to contribute some money to your retirementfund. Each year, you plan to increase your retirement contribution by $500. When you retire in 40years, you plan to withdraw $100,000 at the beginning of each year for the next 20 years. You assumethe following about the yields of your retirementinvestment portfolio:■ During the first 20 years, your investments willearn 10% per year.■ During all other years, your investments will earn5% per year.All contributions and withdrawals occur at thebeginnings of the respective years.a. Given these assumptions, what is the least amountof money you can contribute this year and stillhave enough to make your retirement withdrawals?b. How does your answer change if inflation is 2%per year and your goal is to withdraw $100,000 peryear (in today’s dollars) for 20 years?
c) Retirement Investment: Savings at Retirement = Saving Periods = Interest Rate = Savings Deposit / month= monthly deposits / month
Now consider your financial objective is to save $500,000 for preparing your retirement, assuming 30 years from now. If you invest your RRSP savings in a mutual fund which can realize an average return of 10% per year. To achieve your goal, how much do you need to save at the end of each year over the 30-year period? a. 4,039.26 b. 3,039.62 c. 2,985.54 d. 10,988.32 What is the FV of $100 deposited today into an account with an APR 12.6%, compounded semiannually for 10 years? a. 1478.96 b. 3460.06 c. 327.63 d. 339.36 A car dealer offers payment of $525.32 per months for 60 months on a $30,000 car after making a $5000 down payment. What's the loan's APR? a. 10.4798% b. 9.5224% c. 1.9609% d. 0.7935%
You plan on retiring in 25 years. In order to increase your retirement income, you open a retirement. account today and make a $20,000 deposit. In addition, you will deposit $5,000 every year for the next 25 years. Your plan is to start making annual withdrawals of $50,000 from the account, after you retire. Assuming the account is earning 7% rate of interest, how many years will it take, after you retire, before. the funds in your account are completely exhausted. Please include a written answer in a text box. (Assume annual compounding)
You are trying to decide how much to save for retirement. Assume you plan to save $5,000 per year with the first investment made one year from now. You think you can earn 10.0% per year on your investments and you plan to retire in 43 years, immediately after making your last $5,000 investment. a. How much will you have in your retirement account on the day you retire? 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? c. If you hope to live for 20 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 20th withdrawal (assume your savings will continue to earn 10.0% in retirement)? d. If, instead, you decide to withdraw $300,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it…
8) Special Retirement PlanYou set up a retirement plan where you will invest $20,000 per year in an account with a guaranteed rate of return of ? = 0.05. The plan requires that you start investing immediately at year t=0, and make fifteen (15) additional payments of $20,000 in years t=1, t=2, ..., t=10. You make 11 investments in total. a. What will be the value of this stream of investments in year t=50? b. What is the maximum you can withdraw per year over the twenty (20) year period from t=51, t=52, ..., t=70? You have to withdraw the same amount each year. c. What is the maximum that you can withdraw per year forever if you start to make withdrawals in year t=51. You have to withdraw the same amount each year. 19)