Reference no: EM132813991

You have exactly 30 years until retirement. You will be making monthly deposits into your retirement account that is expected to earn 0.80% per month. The first deposit equal to $1,000 will be made one month from today, the last deposit will be exactly 30 years from now (the day you retire). Every month, your next deposit will grow by 0.2% compared to the one from the previous month. How much money will you have in your retirement account on the day you retire?

Assume, instead, that you will invest your retirement money in the form a one-time payment of $110,000 invested today into the account that has expected APR of 10.8% and semi-annual compounding. How much money will you have in your retirement account on the day you retire in 30 years?

Between accounts described in (A) (expected to earn 0.80% per month) and in (B) (having expected APR of 10.8% and semi-annual compounding) - which one would you choose if you wanted to invest in the account that is likely more risky? Why?

On the day of your retirement (exactly 30 years from today), you plan to transfer the value of your retirement account (computed in part (A)) into a safe account that combines both stocks and bonds and has an expected return of either 4.5% or 9.5% per year (only one of those numbers makes sense, and you have to pick which one). You will make the first annual withdrawal ($C) from that account exactly one year after you retire, and you will be making identical ($C) subsequent annual withdrawals for a total of 25 years (so the last withdrawal will be 25 years after you retire). After 25 years, you expect to have no money in the account. What will be the value of your identical annual withdrawals, $C?