Interest on retirement savings

Assignment Help Operation Management

Reference no: EM131124678

A couple will retire in 50 years; they plan to spend about $26,000 a year in retirement, which should last about 25 years. They believe that they can earn 9% interest on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual payment $ b. How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $56,000 on their child’s college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual payment $

Reference no: EM131124678

Questions Cloud

Fixed spreads between them and the target federal funds rate : In a graph of the market for bank reserves, show how the Federal Reserve limits deviations of the market federal funds rate from its interest rate target under the channel system. Next, show how the Open Market Trading Desk would implement a decision..

Calculate the degree of financial leverage : The Plastic Corporation has a current capital structure consisting of $150,000 of 15% debt and 3,500 shares of common stock. The tax rate is 40%. Determine the earnings per share (EPS) when EBIT is $75,000 and $99,500. Calculate the degree of financi..

Required rates of return for the three securities : The expected return for the general market is 12.8 percent, and the risk premium in the market is 9.3 percent. Tasaco, LBi\1, and Exxos h,ve bet,s of 0.864, 0.693, and 0.575, respectively. What are the corresponding required rates of return for the ..

Operating breakeven point in units : Diane’s Florist has fixed operating costs of $3,825, variable operating costs of $9.50 per flower arrangement, and an average selling price of $24.50 per flower arrangement. What is Diane’s Florist’s operating breakeven point in units (flower arrange..

Interest on retirement savings : A couple will retire in 50 years; they plan to spend about $26,000 a year in retirement, which should last about 25 years. They believe that they can earn 9% interest on retirement savings. a. If they make annual payments into a savings plan, how muc..

Reach her operating break even point : Anke Perks is opening an arts and crafts store that focuses on canvases, paints, and pencils. The selling price of a canvas is $24. The variable operating costs are $14 per canvas while the fixed operating costs are $4,000. Calculate how many canvase..

What is the current yield and yield to maturity : Find the current yield of a 5.65 percent, 8-year bond that's currently priced in the market at $853.75. Now use a financial calculator to find the yield to maturity on this bond (use annual compounding). What's the current yield and yield to maturity..

What is the amount of his new annual payment : Robert is repaying a debt with 21 annual end-of-the-year payments of $1300 each. At the end of the 4th year, he makes an extra payment of $2600. He then refinances his loan by reducing his remaining payment period by 2 years and making level payments..

What is the present value of the quarterback contract : A famous quarterback just signed a $16.2 million contract providing $2.7 million a year for 6 years. A less famous receiver signed a $15.2 million 6-year contract providing $5 million now and $1.7 million a year for 6 years. The interest rate is 9%. ..

User Account

All Pages