Analyze the results in terms of time value of money

Reference no: EM131715584

Assignment

Bottomline: What is Bob's IRA contributions like after continually contributing $2K annually for 33 yrs? What is Lisa's contributions like after stopping at a certain point, then let whatever the current balance is accrue 7% a year? Check the Coffee House Chatroom for samples....Make sure you check out the accompanying IRA Help Video in your Week 6 Course Shell..

Regarding the IRA homework samples - many of you are going to ask yourself - are we all going to have the same answers? The answer is - you will have similar ones, however I want you to understand the concept behind it. You are using a retirement financial product - IRA and see how it is applied in a real life exercise. Before you handle this problem - it is a good idea to understand how an IRA works.

If you need help submitting assignments, please click here for more information.

There are three types of textbook based homework items located at the end of each chapter. These include Discussion Questions (DQ), Exercises (E), and Problems (P). Some homework items have been custom created.

Complete the following homework scenario:

• Bob and Lisa are both married, working adults. They both plan for retirement and consider the $2,000 annual contribution a must.

First, consider Lisa's savings. She began working at age 20 and began making an annual contribution of $2,000 at the first of the year beginning with her first year. She makes 13 contributions. She worked until she was 32 and then left full time work to have children and be a stay at home mom. She left her IRA invested and plans to begin drawing from her IRA when she is 65.

Bob started his IRA at age 32. The first 12 years of his working career, he used his discretionary income to buy a home, upgrade the family cars, take vacations, and pursue his golfing hobby. At age 32, he made his first $2,000 contribution to an IRA, and contributed $2,000 every year up until age 65, a total of 33 years / contributions. He plans to retire at age 65 and make withdrawals from his IRA.

Both IRA accounts grow at a 7% annual rate. Do not consider any tax effect.

• Write a two to three paragraph summary in which you:

o Create a chart summarizing the details of the investment for both Bob and Lisa.
o Explain the results in terms of time value of money.

Reference no: EM131715584

Questions Cloud

Determine the risk premium on common stock : Determine the risk premium on common stock. Determine the required return that common stock should provide.

What are implications for cash flow and shareholder wealth : What are two tactics that a financial manager can use to manage earnings? What are the implications for cash flow and shareholder wealth?

Find and describe the inverse demand functions : Econ30821 Business Economics Questions. Find and describe the inverse demand functions faced by the two firms

Discuss the accumulated depreciation is deducted from ppe : The total liabilities are deducted from total asset to arrive at net asset

Analyze the results in terms of time value of money : Prepare a chart summarizing the details of the investment for both Bob and Lisa. Analyze the results in terms of time value of money.

Define what does the fact that a bond sells at a discount : What does the fact that a bond sells at a discount or at a premium tell you about the relationship between rd and the bond's coupon rate

Frictionless horizontal surface : It travels over a frictionless horizontal surface and then up a frictionless incline. How high does it reach before the object is stopped, in meters?

Describe your forecast process according to the steps : Consider you need to conduct a business forecast. Describe your forecast process according to the steps listed in the attached file

Cost-effective means for dealing with pure risks involving : What is generally the most cost-effective means for dealing with pure risks involving the possibility of high-frequency, low-severity losses?

User Account

All Pages