1. Marcus would like to save up $3 million for his retirement. He has chosen a stock index fund that has an average APR of 7.2%. He plans to draw on the funds at 70 years old which gives him 40 years to save. (a) How much should Marcus save monthly to meet his retirement goal? (b) How much of the future value of $3 million is interest? Give the answer both in dollars and as a percentage of the total funds. 2. Simone bought her house for $150,000 in 2000 and sold it for $725,000 in 2020. What are the total and annual returns on this investment?

1. Marcus would like to save up $3 million for his retirement. He has chosen a stock index fund that has an average APR of 7.2%. He plans to draw on the funds at 70 years old which gives him 40 years to save. (a) How much should Marcus save monthly to meet his retirement goal? (b) How much of the future value of $3 million is interest? Give the answer both in dollars and as a percentage of the total funds. 2. Simone bought her house for $150,000 in 2000 and sold it for $725,000 in 2020. What are the total and annual returns on this investment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 10P

See similar textbooks

Similar questions

DETERMINING THE RIGHT AM OUNT OF SHORT-TERM, LIQUID INVESTM ENTS. Leo and Ava Bryant together earn approximately 92,000 a year after taxes. Through an inheritance and some wise investing, they also have an investment portfolio with a value of almost 200,000. a. How much of their annual income do you recommend the Bryants hold in some form of liquid savings as reserves? Explain. b. How much of their investment portfolio do you recommend they hold in savings and other short-term investment vehicles? Explain. c. How much, in total, should they hold in short-term liquid assets?
Marcus would like to save up $3 million for his retirement. He has chosen a stock index fund that has an average APR of 7.2%. He plans to draw on the funds at 70 years old which gives him 40 years to save. (a) How much should Marcus save monthly to meet his retirement goal?(b) How much of the future value of $3 million is interest? Give the answer both in dollars and as a percentage of the total funds.
Sam Hart decides to invest $70,000 in a fund that will earn 6% annual interest, compounded semiannually. How much will his investment be worth in three years? Draw a timeline to illustrate the problem. What is the future value of your investment? (Use the present value and future value tables, a financial calculator, a spreadsheet or the formula method for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest cent, $X.XX.)
Doris plans to save $5000 per year for the next 35 years. Her money will be deposited in a stock market index fund that has a 0.5% annual management fee. If this fund earns 6% per year, how much will Doris save by investing in this fund instead of an actively managed mutual fund that has a 1% annual fee? Compute your answer as a future amount at the end of year . Assume that payments are made at the end of year. The future equivalent of savings amount at the end of year 35 is ___.
Newman Quincy wants to withdraw $32,700 each year for 14 years from a fund that earns 10% interest.How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately?
Sarah Wiggum would like to make a single investment and have $2.0 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 14 percent, how soon could she then retire? If Sarah can earn 4 percent annually for the next 35 years, the amount of money she will have to invest today is Round to the nearest cent
suppose you decide to invest 5,000 to support your retirement plans, in 30 year time. A private fund promises to pay 6% p.a. until your retirement. How much will be in the account 30 years from now?
Henry Quincy wants to withdraw $30,000 each year for 10 years from a fund that earns 8% interest. How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately?
Mr. Peter Phang, aged 35, is planning to retire at age 55. He understands from his advisor that he currently has a retirement funding shortfall of $800,000 at age 55 when he retires. His financial planner has recommended that he invest his savings in equities to help him meet the retirement funding shortfall. Assuming that the inflation-adjusted rate of return on equities is 5.5%, what is the regular savings which Peter will need to set aside yearly till his retirement?
This is a personal finance question: If Pete has $1,000 and invests it into a mutual fund that returns 10%, what will be his Future Value in 3 years if the investment compounds annually?
Today, you invest a lump sum amount in an equity fund that provides an 12% annual return. You would like to have $10,900 in 6 years to help with a down payment for a home. How much do you need to deposit today to reach your $10,900 goal? Do not round intermediate calculations. Round your answer to the nearest cent.
Felix is keen to apply his finance knowledge to his real-life investment goals. He is currently 19 years of age and wishes to retire from full-time work at the age of 60 with $5 000 000 in his portfolio. He started contributing monthly to a NASDAQ index fund. a) How much will Felix need to contribute at the end of each month in order to receive $5 000 000 at the age of 60 at a compound return of 8.50% p.a.? Show formula, variables, calculation and a concluding statement in your response. b) How much will Felix need to contribute at the start of each month in order to receive $5 000 000 at the age of 60 at a compound return of 8.50% p.a.? Show formula, variables, calculation and a concluding statement in your response. c) Explain why there is a difference between the two amounts determined in parts a) and b) above.