How much money david at retirement twenty years later

Assignment Help Financial Accounting
Reference no: EM132985729

David is planning for retirement in 20 years. Currently, he has $300,000 in a savings account and $600,000 in a mutual fund. Moreover, he plans to add to his savings by depositing $3,000 per month in his savings account at the beginning of each month for the next twenty years until retirement. The savings account will return 5% APR compounded monthly and the investment in the mutual fund will return 8% compounded annually.

Problem (a) How much money will David has at retirement 20 years later?

Problem (b) David expects to live for 20 years after he retires and at retirement he will deposit all of his savings in a bank account paying 2% APR compounded monthly. If he wants to withdraw an equal sum of money at the end of each month from the bank account for financing his daily expenses after retirement, how much can he withdraw each time?

Problem (c) Distinguish the difference between effective annual rate (EAR) and annual percentage rate (APR).

Reference no: EM132985729

Questions Cloud

What was the average annual rate of change in the price : Today the average price of a house is $244,329. What was the average annual rate of change in the price of houses over this time period?
What should a cost manager do : Cost managers are members of the management, What should a cost manager do when the demands of the job conflict with personal or professional ethical standards?
What are the new ark wacc and new cost of equity : ARK company has $720 million in common stock outstanding. Its cost of equity is 18%. What are the new ARK's WACC and new cost of equity?
Role of corporate governance in the kingdom of bahrain : 1. What the components of corporate culture with the oil industry in the Kingdom of Bahrain.
How much money david at retirement twenty years later : David is planning for retirement in 20 years. Distinguish the difference between effective annual rate (EAR) and annual percentage rate (APR).
Why did early corporations had a social or philanthropic : Why did early corporations had a social or philanthropic purpose? According to the historical role of the corporation in society
Find dollar value of interest expense for calendar year : Baltimore Company issued $200,000 face value,Use this information to determine the dollar value of the interest expense for the 2020 calendar year.
Explain challenge of organization design : Explain 1 challenge of organization design with an example.
What is the total amount that need to pay in the five years : If instead, the loan is an interest-only loan, What is the total amount that you need to pay (interest plus loan amount) in the five years period?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is meant by the term financial distress

What is meant by the term 'financial distress'. If we assume that financial distress exists, explain how and why financial distress would cause a firm's equity

  Prepare the journal entries required on july

Prepare the journal entries required on July 31, August 15 and August 25. On July 31, a company declared a cash dividend of $0.25 per common share.

  Determine the weighted average cost of capital

Using market values to determine the weight of each source of financing determine the weighted average cost of capital for Perry Corporation.

  Determine what is the initial investment in the product

The firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years.

  What is the value of the share

A preference share pays dividends totalling $8.00 per year, with dividends paid quarterly. What is the value of the share if the required rate of return is 7.3%

  Calculate amount of firm after-tax cash flow from operations

Calculate the amount of the firm's after-tax cash flow from operations? Moby Dick Corporation has sales of $4,081,733; income tax of $330,957

  Which would not be included in the project costs estimate

Which would not be included in the project costs estimate for a power plant project? An added contingency of 10% in arriving at the final estimate

  Compute what number of common shares outstanding

Compute What number of common shares outstanding at the end of Year 1? At the end of Year 2? How many common shares had been issued

  Importance of an optimal capital structure

What is the meaning and importance of an optimal capital structure to the cost of capital calculation?

  Describe what is the yield to maturity

15%, pay coupons annually, have 6 years remaining to maturity, and are currently priced at $950 per bond. What is the yield to maturity?

  Illustrate what is the best that can be achieved

describe whether the determination of the current value of the long-term assets is subjective or objective. Illustrate what is the best that can be achieved in such a determination?

  How should the fees paid to the consultant be treated

How should the fees paid to the consultant be treated? A company is considering the purchase of new manufacturing equipment

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