Reference no: EM131062795
At your age (assume 20) you can assume that you will live to be 100. If you graduate at 23 and start to work, you can expect to work for 47 years, until age 70. At that time you will be eligible for full Social Security benefits, which can reasonably be expected to be $3,000 per month, and which will be received monthly for the rest of your life. You can reasonably expect that your retirement savings will earn an average of 8 percent per year throughout the period that you accumulate your retirement funding and during your retirement years. Further assume that you will want to have an annual income of $120,000 throughout your retirement.
1. Ignoring inflation in all calculations, how much will you need to have saved at retirement in order to be able to fund your retirement?
2. How much will you have to save each year in order to fund this amount if you start at 23?
3. How much will you have to save each year in order to fund this amount if you start at 25?
4. How much will you have to save each year in order to fund this amount if you start at 30?
5. How much will you have to save each year in order to fund this amount if you start at 40?
6. Briefly explain how you think those funds should be managed. That is, suggest a reasonable overall plan to achieve your goal, using all of the tools we have considered throughout the course.
|
Frick recognize on the redemption of these bonds
: On January 1, year 13, Frick Inc. redeemed its fifteen-year bonds of $500,000 par value for 102. They were originally issued on January 1, year 1, at 96 with a maturity date of January 1, year 16. Frick amortizes discounts, premiums, and bond issue c..
|
|
What is the equivalent annual annuity
: Project A requires an initial investment of $7,500 at t = 0. Project A has an expected life of 4 years with cash inflows of $5,000, $4,500, $900, $2,000 at the end of Years 1, 2, 3, and 4 respectively. The project has a required return of 15%. What i..
|
|
Determine terminal year after -tax non-operating cash flow
: Sports EX Inc. is a Sports Shoes Company which is considering investing in a new equipment for the production of a new line of Tennis and Football Shoes for its elite customers. The new equipment will costs $250,000, and an additional $80,000 is need..
|
|
What is the present value of the annuity
: A 15-year annuity pays $2,150 per month, and payments are made at the end of each month. If the interest rate is 9 percent compounded monthly for the first eight years, and 6 percent compounded monthly thereafter, what is the present value of the ann..
|
|
Saved at retirement in order to be able to fund retirement
: At your age (assume 20) you can assume that you will live to be 100. If you graduate at 23 and start to work, you can expect to work for 47 years, until age 70. At that time you will be eligible for full Social Security benefits, which can reasonably..
|
|
Three securities comprise of the risk-free asset
: You have invested $41,330 portfolio in three securities. The three securities comprise of the risk-free asset, Stock A, and Stock B. The beta of stock A is 2 while the beta of stock B is 0.6. 26% of the portfolio is invested in the risk-free security..
|
|
What is the firm inventory conversion period
: On average, a firm purchases $2,000,000 in merchandise a month. It has inventories equal to two month purchases on hand at all times. If the firm analyzes its accounts using a 360-day year, what is the firm’s inventory conversion period?
|
|
After-tax cash flow be from the equipment sale
: Today, Litchfield Design purchased a piece of equipment for 134,000 dollars that will be depreciated to 8,000 dollars over 18 years using straight-line depreciation. What would the after-tax cash flow be from the equipment sale if the equipment is so..
|
|
What amount would the insurance company pay
: For each of the following situations, what amount would the insurance company pay?
|