Suppose you're fresh out of college and have a new job where you're able, by being frugal, to put aside $400 from each monthly paycheck for 2 years to invest in a fund that pays you 6% interest, compounded monthly. By the end of two years you would have put $9600 total into that fund, and it would be worth $10,223.65 at that point. Not bad. You've made over $600! But by then there are other constraints on your monthly paycheck and you can't continue your good habit. However, you leave that $10,223.65 invested in the fund that pays 6% compounded monthly. How much is that investment worth when you go back to claim it when you retire, exactly 46 years later? Round your answer to the nearest dollar,

Suppose you're fresh out of college and have a new job where you're able, by being frugal, to put aside $400 from each monthly paycheck for 2 years to invest in a fund that pays you 6% interest, compounded monthly. By the end of two years you would have put $9600 total into that fund, and it would be worth $10,223.65 at that point. Not bad. You've made over $600! But by then there are other constraints on your monthly paycheck and you can't continue your good habit. However, you leave that $10,223.65 invested in the fund that pays 6% compounded monthly. How much is that investment worth when you go back to claim it when you retire, exactly 46 years later? Round your answer to the nearest dollar,

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

See similar textbooks

Similar questions

You are trying to decide how much to save for retirement. Assume you plan to save $7500 per year with the first investment made one year from now. You think you can earn 8.5% per year on your investments and you plan to retire in 29 years, immediately after making your last $7500investment. b. If, instead of investing $7500 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 16 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 16th withdrawal (assume your savings will continue to earn 8.5% in retirement)? d. If, instead, you decide to withdraw $170000 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:…
You plan on saving $5,200 this year, nothing next year, and $7,500 the following year. You will deposit these amounts into your investment account at the end of each year. What will your investment account be worth at the end of year three if you can earn 8.5 percent on your funds? $13,528.12 $13,621.57 $13,907.11 14,526.50
You are trying to decide how much to save for retirement. Assume you plan to save $4,000 per year with the first investment made one year from now. You think you can earn 10.5% per year on your investments and you plan to retire in 36 years, immediately after making your last $4,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $4,000 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 28 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 28th withdrawal (assume your savings will continue to earn 10.5% in retirement)? d. If, instead, you decide to withdraw $270,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it…
You are trying to decide how much to save for retirement. Assume you plan tpo save $4.000 per year with the first investment made one year from now. You think you can earn 10.5% per year on your investments and you plan to retire in 36 years, immediately after making your last $4,000 investments (A) if , instead , you decide to withdraw $270,000 per year in retirement (again with the first withdrawal one year after retiring) how many years will it take until you exhaust your savings? (B) assuming the most you can afford to save is $800 per year , but you want to retire with )1,000,000 in your investments account , how high of a return do you need to earn on your investments?
You are trying to decide how much to save for retirement. Assume you plan to save $6,000 per year with the first investment made one year from now. You think you can earn 6% per year on your investments and you plan to retire in 43 years, immediately after making your last $6,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $6,000 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 18 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 18th withdrawal (assume your savings will continue to earn 6% in retirement)? d. If, instead, you decide to withdraw $100,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take…
How much do you need to save each year for 30 years in order to have $775,000, assuming you are investing the money in an account that earns 8%? How much of the $775,000 comes from contributions (your out of pocket costs)?
You have already saved $20,000. Suppose you continue to make contributions of $750 at the beginning of each month for the next 15 years. You have a goal of having $200,000. 1) What monthly nominal rate of return must his investment earn for him to achieve his goal? 2) If the best rate in the market he can find is a 10% monthly nominal rate, what would be the new amount for the contributions he will have to make to still achieve his goal of having $150,000 in 10 years?
How much do you need to save each year for 30 years in order to have $775,000, assuming you are investing the money in an account that earns 8%? How much of the $750,000 comes from principal (you’re out of pocket costs)?
13. You have just made your first $4,000 contribution to your retirement account. Assuming you earn an 11 percent rate of return 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?). 14. You are saving up for a down payment on a house. You will deposit $600 a month for the next 24 months in a money market fund. How much will you have for your down payment in 24 months if the fund earns 12% APR compounded monthly?
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…
You need $4,000 to buy a new baking oven for your business in 4 years. What value you must have now if the compounded annually return is 12%. Your parents placed $240,000 in a trust fund for you. In 15 years, what will be the worth of the savings. If the estimated rate of return on the trust fund is 10%?
Suppose you are 35 years old and would like to retire at age 65. Furthermore, you would like to have a retirement fund from which you can draw an income of $50,000 per year–forever!How much would you need to deposit each month to dothis? Assume a constant APR of 8% and that the compounding and payment periods are the same. To draw $50,000 per year, there must be $ in your savings account when you retire. You can reach your goal by making monthly deposits of $