How much must tommy have when he is ready to retire

Assignment Help Financial Accounting
Reference no: EM132876628

Question - One day, your friend Tommy Wan calls you and seeks your advice on some financial matters. Tommy is celebrating his 30th birthday today and wants to start saving for his anticipated retirement at age 60. He wants to be able to withdraw $120,000 from his retirement account on each birthday for 20 years following his retirement; the first withdrawal will be on his 61st birthday. To achieve this goal, Tommy plans to make equal annual deposits on each birthday into his retirement account; the first deposit will be on his 31st birthday. Tommy intends to invest his money in a bank, which offers 6 percent interest per year.

Required -

a. How much must Tommy have when he is ready to retire?

b. How much must Tommy deposit annually to be able to make desired withdrawals at retirement?

c. Suppose Tommy currently has $50,000 in a mutual fund, which will return 10 percent per year. He plans to transfer all his investment from his mutual fund account to his retirement account on his 50th birthday. How much must Tommy deposit annually to be able to make desired withdrawals at retirement?

d. Without doing any calculation, explain how the changes in retirement age and investment return may affect the annual deposit needed.

Reference no: EM132876628

Questions Cloud

Understanding of core concepts of marketing : Now that you have an understanding of the core concepts of marketing, discuss how your understanding of marketing has changed.
Develop argument that either renewable energy : You will develop your argument that either renewable energy will replace fossil fuel or it will not as the source of energy for American business.
Labour relations act-canada labour code : -If you had a choice to work in a similar position for an employer that was either unionized or non-unionized, which one would you choose? Why?
How would on-the-fly updates make more interesting : Ratings are important to businesses. How would a JavaScript form be able to help? How would on-the-fly updates make it more interesting for the visitor?
How much must tommy have when he is ready to retire : Tommy intends to invest his money in a bank, which offers 6 percent interest per year. How much must Tommy have when he is ready to retire
What conditions help a person become resilient : What conditions help a person become resilient? What qualities does a resilient person possess?
Equal employment opportunity and performance evaluations : In what ways would you improve the standing Equal Employment Opportunity and Performance Evaluations?
What did personally gain from the course : Feedback on the assignments and class exercises. Could you find the information you needed? What have you learned from the assignments?
Compute the anticipated break-even sales in units : Compute the anticipated break-even sales in units for the Following: BBB Company anticipates a unit selling price of $150, a unit variable cost of $110

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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