Alex Moore is 43 years old and has accumulated $78,000 in his self-directed defined contribution pension plan. Each year he contributes $1,500 to the plan, and his employer contributes an equal amount. Alex thinks he will retire at age 60 and figures he will live to age 83. The plan allows for two types of investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 34% Alex now has 40% of his money in the risk free Investment and 60% in the risky investment. He plans to continue saving at the same rate and keep the same proportions invested in each of the investments His salary will grow at the same rate as inflation. of the total amount of new funds that will be invested by Alex and by his employer on his behalf, how much will he put into the safe account each year, how much into the risky account? Mumple Choice $1.500 $1.500 $1,200 $1,800 $2.000, $1,000

Alex Moore is 43 years old and has accumulated $78,000 in his self-directed defined contribution pension plan. Each year he contributes $1,500 to the plan, and his employer contributes an equal amount. Alex thinks he will retire at age 60 and figures he will live to age 83. The plan allows for two types of investments. One offers a 4% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 34% Alex now has 40% of his money in the risk free Investment and 60% in the risky investment. He plans to continue saving at the same rate and keep the same proportions invested in each of the investments His salary will grow at the same rate as inflation. of the total amount of new funds that will be invested by Alex and by his employer on his behalf, how much will he put into the safe account each year, how much into the risky account? Mumple Choice $1.500 $1.500 $1,200 $1,800 $2.000, $1,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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As part of his 401(k) retirement plan at work, Ken Lowery invests 5.0 percent of his salary each month in the Capital Investments Lifecycle Fund. At the end of this year, Ken's 401(k) account has a dollar value of $210,800. If the fund charges a 12b-1 fee of 0.75 percent, what is the amount of the fee? (Round your answer to 2 decimal places.) 12b-1 fee
Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to continue at 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security benefit in today’s dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? 1. $6,245. 2. $7,659. 3. $8,432. 4. $9,252.
By the end of this year you would be 35 years old and you want to plan for your retirement. You wish to retire at the age of 65 and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened now your retirement account with 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate, throughout your retirement years. How much will the face value of the bond that you will be investing?Please calculate the monthly payment in your retirement account in order to be able to achieve the plan mentioned above? How much will your inheritors receive? Kindly solve all the questions and sub questions.
Marco is 45 years old and plans to retire at age 66. He wants you to assume he will be retired for 18 years before he dies. Assume Marco needs $50,504 at the beginning of the first year of retirement. Use an investment return of 7 percent and an inflation assumption of 3 percent. What amount of money will he need to have saved at the beginning of retirement? (Round any interest rate calculations to 4 decimal places e.g. .0125 for 1.25% and round the final answer to 2 decimal places)
By the end of this year you would be 35 years old and you want to plan for your retirement. You wish to retire at the age of 65 and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened now your retirement account with 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate, throughout your retirement years. Suppose you think if you were to retire right now you would have needed $50,000 each year to supplement your social security and maintain your desired lifestyle. But because there is on average 3% annual inflation, when you retire in 30 years from now you need more than $50,000 per year to maintain the lifestyle you like. How much annual payment in the retirement account is needed to accumulate the amount needed to purchase the bond…
Ozzy is working a tire factory that offers a pension in the form of an annuity that pays 5.5% interest compounded annualy. he wants to work for 30 years and then have a retirement income of $48000 at the end of the each year forever. his employer decides to make annual deposit starting one year from now, with a first payment of $K and then followed by subsequent deposits that decreases by $250 anuaaly into the pension fund. Calculate the value of K
Devin has an opportunity to save $285 per month at an APR of 4.8% in a 401K plan through work. He plans to retire in 25 years. The income taxes are at 32% for him. (1) How much will Devin have deposited into the account by the time he retires? (Express your answer rounded correctly to the nearest cent!) (2) How much interest will Devin have earned on his investment by the time he retires? Use Excel's FV function to help answer this question. (Express your answer rounded correctly to the nearest cent!) 2$ (3) If Devin's company offers a 30% matching contribution, use Excel's FV function to determine how much his investment will be worth when he retires. (Express your answer rounded correctly to the nearest cent!)
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 ___.
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Robin Hood is 23 years old and has accumulated $4,000 in her self-directed defined contribution pension plan. Each year she contributes $2,000 to the plan, and her employer contributes an equal amount. Robin thinks she will retire at age 67 and figures she will live to age 81. The plan allows for two types of investments. One offers a 3.5% risk-free real rate of return. The other offers an expected return of 10% and has a standard deviation of 23%. Robin now has 5% of her money in the risk-free investment and 95% in the risky investment. She plans to continue saving at the same rate and keep the same proportions invested in each of the investments. Her salary will grow at the same rate as inflation. What is the expected value of Robin's risky assets at retirement?
Joe's starting salary as a mechanical engineer is around $100,000. Joe is planning to place a total of 8% of his salary each year in the mutual fund. Joe expects a 5% salary increase each year for the next 30 years of employment. If the mutual fund will average 9% annual return over the course of his career, what can Joe expect at retirement?

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