Developed a financial retirement strategy

Assignment Help Financial Management

Reference no: EM13809139

Doug has developed a financial retirement strategy. His plan is to invest in somewhat risky stocks for 15 years and then move everything to low risk bonds for the retirement years as described below.

He presently has $150,000 in a retirement account that will be re-invested in a stock fund that has historically earned 10% annually (EAR) with no dividends. The plan is to add an additional $1,000 to the fund at the end of each month for 15 years.

When he retires, he will reinvest the stock fund in tax-free municipal bonds and live on the coupons only that have a coupon rate of 3.5% paid semi-annually. (The bonds will be donated to charity upon his death).

How much will he receive semi-annually during retirement? Show excels formula/calculations.

Reference no: EM13809139

Questions Cloud

The current exchange rate between french franc and us dollar : The current exchange rate between French franc and US dollar is FF 5.529 per dollar. Last month this rate was FF 5.491 per dollar. a) FF has appreciated b) US $ has depreciation c) FF has depreciated d) US $ has appreciated

Efficient market hypotheses : Of the following efficient market hypotheses, which one has research generally indicated is not correct? 1. weak 2. Semi Strong 3. strong 4. two of the options

The statement of cash flows-changes in Balance Sheet account : The Statement of Cash Flows on page 2.1.6 presents how changes in Balance Sheet accounts will affect a company’s cash balance. Refer to that information and discuss how an increase in your company's accounts payable from one period to the next is a m..

Calculate companys taxable income : ABC Co., a corporation had gross sales of $500,000 in 2008. Additionally, the company also received $100,000 in dividend income and $50,000 as interest income. The total expenditures of this company for 2008 were $272,000. Calculate company's taxable..

Developed a financial retirement strategy : He presently has $150,000 in a retirement account that will be re-invested in a stock fund that has historically earned 10% annually (EAR) with no dividends. The plan is to add an additional $1,000 to the fund at the end of each month for 15 years. H..

In what year will the loan balance go to zero : Kay Kinder has borrowed $500,000 at a nominal annual rate with monthly compounding of 6.50% to start a new company. The first payment on the loan will be at the end of year 1. In what year will the loan balance go to zero?

Bonds have ten years remaining until maturity : Amazing Co. bonds have 10 years remaining until maturity. They pay a 10.8% semi annual coupon and have a face value of $1000. The current nominal YTM on Amazing Co.'s bonds is 10.14%. However, Amazing Co. may call the bonds in 5 years at a call price..

What is this projects internal rate of return : Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $950000 and will generate net cash inflows of $17,000 per year for 11 years. What is the project's NPV..

Calculate the expected return of your portfolio : Suppose you have a portfolio consists of stock A and stock B. The total value of your portfolio is $150,000. Out of the total value $97,500 was invested in stock B and the rest in stock A. Calculate the Expected Return of your portfolio.

User Account

All Pages