Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,000 away in your rebrement acEBU 40 years. Plan 2 starts after 10 years and puts away $1,500 every year for 30 years. Plan 3 starts after 20 years and puts away $4.000 every year for the last 20 years of employment All three plans guarantee an annual growth rate of 5%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the-Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years? (Select the best response.) O A. Plan 3 because it offers the highest future value OB. Plan 1 because it offers the highest future value OC. Plan 2 because it offers the highest future value they offer the same future value

Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,000 away in your rebrement acEBU 40 years. Plan 2 starts after 10 years and puts away $1,500 every year for 30 years. Plan 3 starts after 20 years and puts away $4.000 every year for the last 20 years of employment All three plans guarantee an annual growth rate of 5%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the-Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years? (Select the best response.) O A. Plan 3 because it offers the highest future value OB. Plan 1 because it offers the highest future value OC. Plan 2 because it offers the highest future value they offer the same future value

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 44P

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You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,500 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,000 every year for 30 years. Plan 3 starts after 20 years and puts away $4,000 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 10%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings?
You just accepted an offer from XYZ Petrochemical Company in Louisiana. As a sign up bonus, the XYZ will deposit $10,000 in a retirement account for you which generates 12% return annually. In addition, the company deposits $5,000 every year in the same account, if you stays with XYZ. How much money will be accumulated in this account if you decide to retire 40 years from now?
We are considering the effects of starting early or late to save for retirement. Assume that each account considered has an APR of 6% compounded monthly. Following expert advice, you begin your retirement program as soon as you graduate from college at age 32. You plan to retire at the age of 65. What monthly contributions do you need to make to have a retirement account worth $1,000,000? (Round your answer to the nearest cent.) $ What will your total personal contribution be by the time you retire if you start saving after graduation? $ Against expert advice, you begin your retirement program at age 49. You plan to retire at the age of 65. What monthly contributions do you need to make to have a retirement account worth $1,000,000? (Round your answer to the nearest cent.) $ What will your total personal contribution be by the time you retire if you start saving at age 49? $ How much more will you personally contribute by the time you retire if you start saving at age 49…
Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,100 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $1,600 every year for 30 years. Plan 3 starts after 20 years and puts away $3,600 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 6%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years?…
Suppose that you’d like to retire in 40 years and you want to have a future value of $ 1000000 in a savings account. Also suppose that your employer makes regular monthly payments into your retirement account. If you can expect an APR of 6.5% for your account, how much do you need your employer to deposit each month? Employer Contribution = The formulas we have been using assume that the interest rate is constant over the period in question. Over a period of 40 years, though, interest rates can vary widely. To see what difference the interest rate can make, let’s assume a constant APR of 5% for your retirement account. How much do you need your employer to deposit each month under this assumption? Employer Contribution =
Consider a person who begins contributing to a retirement plan at age 25 and contributes for 40 years until retirement at age 65. For the first 10 years, She contributes $3,000 per year. She increases the contribution rate to $5,000 per year in years11 through 20. This is followed by increases to $10,000 per year in years 21 through 30 and to $15,000 per year for the last 10 years. This money earns a 9 percent return. First compute the value of the retirement plan when she turns age 65. Then compute the annual payment she would receive over the next 40 years if the wealth was converted to an annuity payment at 8 percent. Assume that contributions are made at the end of each year. You will not earn interest until the following year.
Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 7%, what is the present value of your retirement savings? please answer fast i give upvote
Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 7%. The future value at retirement (age 65) of your savings is:
After graduation from university, you start working and you want to plan for your retirement. You will be retiring in 25 years and during your retirement, you plan to spend USD 20,000 per year. You expect your retirement to last 30 years. You believe you can earn 8% on your retirement savings. If you make annual payments into a retirement plan during your working life, how much will you need to save each year to reach your retirement goal? (You will make the first payment at the end of the year).
A company offers you employment for the next 30 years until retirement but will not pay you a pension when you do retire, so you start investing now for your retirement. You know you can earn 5% compounded monthly on an available investment for the next 30 years until you retire. During retirement you will earn 6% compounded annually on any funds remaining in the investment, and you expect to withdraw $110.000 at the end of each year of your retirement. If you anticipate living 20 years in retirement, how much of your salary as a minimum would you have to invest at the end of each year until retirement?
Every year, you receive your entire annual salary at the end of the year. This year, your end-of-year salary will be $50,000 (in nominal terms). In real terms, you expect your salary to increase at a rate of 2% per year in the future. You have decided to start saving for retirement by putting money in a savings account. You plan to retire in 35 years, and you expect to live for 25 years after that. You assess that a reasonable lifestyle during those 25 years will require you to have, at the end of every year, a disposable income of $25,000 in real terms (i.e. the same purchasing power as $25,000 today). The nominal interest rate on your savings account is 8%, and it is expected to stay at that rate forever. The real interest rate is also expected to stay at its current level of 3.5%. How much money (in nominal terms) will you need to have in your savings account when you retire, in 35 years (end of year 35), in order to be able to enjoy the lifestyle that you find reasonable? HINT:…
This is a classic retirement problem. A time line will help in solving it. Your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $80,000 from her savings account on each birthday for 15 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 9 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund. If she starts making these deposits on her 36th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement? Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump-sum…