How much do you need to have in your account at retirement

Reference no: EM132741248

Business Finance

Attempt the following:

Question : a) You want to receive $6500 per month in retirement. If you can earn 15% compounded monthly and you expect to need the income for 27 years, how much do you need to have in your account at retirement?

Question b): Live Forever Life Insurance Co. is selling a perpetuity contract that pays $3,800 monthly. The contract currently sells for $185,000. What is the monthly return on this investment vehicle? What is the APR? The effective annual return?

Question c): Marcus Co. is growing quickly. Dividends are expected to grow at a 25 percent rate for the next seven years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 16 percent and the company just paid a $11.85 dividend, what is the current price of the stock?

Question d): One More Time Software has 10.10% coupon bonds on the market with nine years to maturity. The bonds make quarterly payments and currently sell for 116.90% of par. Compute YTM? The effective annual yield? Face value of the bond is $1000000.

Question e): Ackerman Co. has bonds on the market with nine years left to maturity. The bonds make quarterly payments. If the bond currently sells for $934000, The required return is 12%. Find out the coupon rate? The face value of the bond is $1200000.

Question f): The Bulldog company paid a dividend of $2.5 this year. If the dividends are expected to grow at six percent per year, what is the expected dividend per share for bulldog six years from now? eight years from now? Twelve years from now?

Question g): Mr. Muhammad Akram has received a job offer from a large investment bank as an accountant. His base salary will be $32,000 constant to date of retirement. He will receive his first annual salary payment one year from the day he begins to work. In addition, he will get an immediate $19,000 bonus for joining the company(just for once). Mr. Ahmad is expected to work for 27 years. What is the present value of the offer if the discount rate is 14 percent compounded monthly?

Question h): Your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $105,000 from her savings account on each birthday for 20 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 7 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund.

If she starts making these deposits on her 36th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement?

Reference no: EM132741248

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