How long before the savings plan is exhausted

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Reference no: EM132021957

1. Suppose you accumulated $500,000, perhaps from many years of saving. You put the money in a savings plan earning 6% compounded monthly. If you want to withdraw $4,000 at the beginning of each month, how long before the savings plan is exhausted?

2. Suppose you accumulated $500,000, perhaps from many years of saving. You put the money in a savings plan earning 6% compounded monthly. If you want the plan to last 40 years, how much can you withdraw at the beginning of each month?

3. You deposit $500 today into a savings plan and deposit an additional $50 each quarter (starting in 3 months) for 25 years. If you earn 6.25% compounded quarterly, what will your balance be in 25 years?

4. Jennifer just turned 23 and can save $500 per quarter, starting in three months. If Jennifer can earn 7% compounded quarterly, what age will she be when she accumulates $1,000,000?

5. At the end of each month for 20 years, you deposit $150 into a savings plan. You then make no further deposits, but leave the money in the plan for another 10 years. If the plan earn 5.5% compounded monthly, what will the balance be at the end of the 30-year period?

6. Bobby would like to take a trip to Greece in 5 years. He will need $1,575 monthly while he is there and expects to remain there for 8 months. If money is worth 3.9% compounded monthly, how much will Bobby need to deposit now in order to make his trip to Greece become a reality? Assume he will need the money at the BEGINNING of each month.

7. In 4 years, your son will be entering college and you would like to help financially. You decide to create a college fund and make four annual deposits, starting now. In four years, you would like your son to be able to make four annual withdrawals of $7,500 from the fund (at the beginning of each year) that will cover his annual tuition. If the college fund earns 3.6% compounded annually, how much must you deposit at the beginning of each year? Assume tuition remains the same for the four years your son is attending college.

Reference no: EM132021957

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