Salary in a single payment at the end of each year

Assignment Help Finance Basics
Reference no: EM131957065

Harry started to work today and wants to establish a saving plan for his future. His salary this year (at the end of year 1) will be $60,000 and it will grow by 4% annual. He is planning to work for 4 years (from year 1 to year 4) and save a 40% of his salary so he can pay his MBA degree in the years 5 and 6. Harry estimates that his MBA degree will cost him $50,000 at the beginning of year 5 and $50,000 at the beginning of year 6. If he is left with a surplus after paying his MBA degree, Harry plans to leave that leftover gaining interests.

After finishing up his MBA degree, Harry thinks that he can find a job that pays him $150,000 in the year 7 and that it can grow by a 6% annual. Harry plans to save a 15% of his salary of the year 7 to the year 36 that is when he plans to retire.

The interest rate is 7.4% annual (effective)

Presume Harry receives his salary in a single payment at the end of each year.

a)   Find how much Harry will be able to withdraw monthly from the year 37 to the year 70 (the first monthly withdrawal will be at the end of month one in the year 37.)

Reference no: EM131957065

Questions Cloud

What is the amount of the shareholders equity : A firm has common stock of $81, paid-in surplus of $170, total liabilities of $365, and fixed assets of $510. What is the amount of the shareholders' equity?
Discuss the elements in the research proposal : Design a 10-12 slide PowerPoint presentation (not including title and reference slides) focusing on the Research Proposal: Project Paper (submitted last week).
Valuing preferred stock : A firm has an issue of preferred stock outstanding that pays a $2.6 dividend every year in perpetuity. If the required return is 10.44 percent
Forward rate to be between brazilian real and british pounds : What would you expect the Forward Rate to be between Brazilian Real and British Pounds, one year from now?
Salary in a single payment at the end of each year : Presume Harry receives his salary in a single payment at the end of each year.
What stock price would you consider appropriate : A firm has earnings of $4.67 per share. The benchmark PE for the company is 22. What stock price would you consider appropriate?
What does the weight on the risk free asset in the portfolio : What does the weight on the risk free asset in the portfolio in part (c) mean? What is the standard deviation of your portfolio in (a)?
What is the market value of this firm : The legal problems are personal and unrelated to the actual business. What is the market value of this firm?
How would you address the crisis that eboni is experiencing : What strategies can you use to ensure that your personal values will not influence your practice with Eboni? How would you address the crisis that Eboni.

Reviews

Write a Review

Finance Basics Questions & Answers

  Question regarding the ending value of the bond

A 15 year bond issued today by Carris, Inc. has a coupon rate of 7%, a required return of 5% and a face value of $1000. The bond will be sold 4 years from now when interest rates will be 8%. What is the ending value of the bond when it is sold (to..

  A share of common stock just paid a dividend of 100 if the

a share of common stock just paid a dividend of 1.00. if the expected long-run growth rate for this stock is 5.4 and

  Budgets play a critical role in management activities such

budgets play a critical role in management activities such as planning controlling and motivating employees. used

  What is the operating cash flow

Lenson's is considering a project with a five-year life. The project requires $90,000 of fixed assets that are classified as five-year property for MACRS.

  What is the clean price of the bond

You purchase a bond with an invoice price of $1,090. the bond has a coupon rate of 8.4%, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond?

  Calculate the expected return on each stock

Assuming the capital asset pricing model holds and Stock A's beta is greater than Stock B's beta by .25, what is the expected market risk premium?

  Calculate the theoretical intrinsic value of the call option

Given the following information, calculate the theoretical intrinsic value of the Call option using the Black Scholes Model. IF the market price for the Call option = $11, should the investor buy?

  Calculate favorable income differential per share

Why would the return on investing in the common stock directly be higher than investing in the convertible bond?

  Suppose the federal reserve uses data to estimate the

suppose the federal reserve uses data to estimate the currency-deposit ratio to be 0.90 the ratio of liquid savings

  What is the company net income

If the firm has a debt-to-equity ratio of 1.25, what is the company's net income? (round intermediate calculations to 2 decimals and round answer to 2 decimal places , e.g. 12.25.)

  Repeat part a using the installment method

Indicate the amount and nature of income (revenue and expense) that Turner would recognize during 2010, 2011, and 2012 if it uses the completed-contract method. Ignore income taxes. Repeat Part a using the percentage-of-completion method. Repeat Part..

  A venture capitalist has expressed interest in potentially

a venture capitalist has expressed interest in potentially funding your new business venture and has asked for a

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