Historical long-term average rate of return on stock market

Assignment Help Financial Management
Reference no: EM131445281

Let's assume that you can save $4,800 per year (that amount would include both your contribution to your 401k and your employer's contribution). Investing it in your 401k would earn 10% per year (slightly below the historical long-term average rate of return on the stock market). If you have a 40-year time horizon until retirement, how much would you have when you retire? How much would you have in 30 years?

Reference no: EM131445281

Questions Cloud

The dividend is not expected to change in the future : A preferred stock selling for $116 with an annual dividend payment of $12. The flotation cost will be $6 per share. The? company's marginal tax rate is 30 percent. Retained earnings totaling $4.8 million. The price of the common stock is $67 per? sha..
Should we expand our product portfolio : Gemini Case Study : Should we expand internationally? Should we expand our product portfolio? If we do expand our product portfolio, by how much (In other words, should we offer lots of new products, or stick with our core competencies by making impr..
Find an information flowsheet from health care organization : Find an information flowsheet from a health care organization. It can be from a published source or from an actual organization. Based on this flowsheet, comment on what the structure of the organization’s information system appears to be. If you wer..
Correlation coefficient between annual portfolio returns : Greta, an elderly investor, has a degree of risk aversion of A = 4 when applied to return on wealth over a 3-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of 3-year strategies. If the correlation coe..
Historical long-term average rate of return on stock market : Let's assume that you can save $4,800 per year (that amount would include both your contribution to your 401k and your employer's contribution). Investing it in your 401k would earn 10% per year (slightly below the historical long-term average rate o..
What are the expected future cash flow regarding the project : Titan Inc. is considering introducing a new type of toy for cats. Titan expects the toys to become obsolete after five years when it will be discovered that toys only encourage cats to get anxious. What are the expected future cash flow regarding the..
How fast can sales grow before any new fixed assets : Southern Mfg., Inc., is currently operating at only 87 percent of fixed asset capacity. Current sales are $660,000. How fast can sales grow before any new fixed assets are needed?
What is the external financing needed : The most recent financial statements for Reply, Inc., are shown here: Income Statement Balance Sheet Sales $ 34,000 Assets $ 57,700 Debt $ 22,500 Costs 24,500 Equity 35,200 Taxable income $ 9,500 Total $ 57,700 Total $ 57,700 Taxes (40%) 3,800 Net in..
What is the sustainable growth rate : Assume the following ratios are constant: Total asset turnover 2.0 Profit margin 5.1 % Equity multiplier 1.2 Payout ratio 25 % What is the sustainable growth rate?

Reviews

Write a Review

Financial Management Questions & Answers

  The initial cost of a piece of equipment

The initial cost of a piece of equipment is $10,000, and it has a salvage value at the end of its 10 year life of $1,000. Maintenance cost is estimated to be $500 the first year and increase $50 per year to the end of its 10 year life. If the company..

  What is price per share of the company stock

Ward Corp. is expected to have an EBIT of $2,450,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $176,000, $107,000, and $126,000, respectively. All are expected to grow at 19 percent per year..

  What would be the rate of return on your investment

Suppose you have $10,000 to invest and purchase 200 shares of IBM stocks at $100 per share by borrowing $10,000 from the broker. What would be the rate of return on your investment if IBM stock goes up by 30% by year's end?

  What is the current price of the bond-corporate bonds

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon r..

  Compare alternatives against giving back cash to investors

Capital City Brewery (CCB) brews three different types of beers from their brewpub and restaurant in downtown Springfield. Cost of Capital -- You get to determine it, it is not given. Each alternative may have different risk profiles. Consider the ri..

  Qualified dividend and long term capital gains distributions

You are planning to save $5k/year, at the end of each year, and invest into a diversified stock index fund. The fund is anticipated to yield an 9.4% total annual return, of which about 3% will be in the form of qualified dividend and long term capita..

  Find the maximum overall rate of the loan

Marta purchased a home with an adjustable rate mortgage. The margin on an adjustable-rate mortgage is 5.5% and the rate cap is 6.5% over the life of the loan. If the current index rate is 8.9%, find the maximum overall rate of the loan.

  Conduct a thorough financial statement analysis

Conduct a thorough financial statement analysis of PGS' projected financial statements to see if slowing the company's growth rate will allow it to meet the bank's requirements for reduced debt.

  Terms relate to independent bond issues

The following terms relate to independent bond issues:

  What is the project payback period

A project has an initial cost of $46,575, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 13%. What is the project's payback period?

  Loan is to be repaid in equal annual installments

Big Brothers INC borrows $66,737 from the bank at 18.15% per year, compounded annually, to purchase new machinery. The loan is to be repaid in equal annual installments at the end of each year over the next 8 years. How much will each annual payment ..

  EAR and Annuities-plan for retirement

You are helping your friend plan for her retirement. if interest rates are 12 percent per year, compounded quarterly, how much must she deposit into her retirement fund at the end of each month (in equal amounts per month) over the next 25 years, in ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd