In wisely planning for your retirement, you invest $18,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.8% per year. How much will you be able to withdraw each year for 14 years, starting one year after your last deposit? The amount that you will be able to withdraw each year is $|

In wisely planning for your retirement, you invest $18,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.8% per year. How much will you be able to withdraw each year for 14 years, starting one year after your last deposit? The amount that you will be able to withdraw each year is $|

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 37P: Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time...

See similar textbooks

Similar questions

In wisely planning for your retirement, you invest $15,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.5% per year. How many future dollars will you have in the account immediately after your last deposit? You will have $ future dollars in your account immediately after your last deposit.
How much will it cost to purchase a 15-year constant growth annuity paying $12,600 at the end of every year if it earns 5.5% compounded annually and is indexed to an inflation rate of 2% annually? (Round your final answer to 2 decimal places.)
In wisely planning for your retirement, you invest $27,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.6% per year. How much will you be able to withdraw each year for 18 years, starting one year after your last deposit? The amount that you will be able to withdraw each year is $
A series of five constant-dollar (or real-dollar)payments (beginning with $5,000 at the end of thefirst year) are increasing at the rate of 7% per year.Assume that the average general inflation rate is 5%and the market interest rate is 12% during this inflationary period. What is the equivalent present worthof the series?
Omar's current annual salary is $54,000. How much will he need to earn (in dollars) 10 years from now to retain his present purchasing power if the rate of inflation over that period is 2%/year? Assume that inflation is continuously compounded. (Round your answer to two decimal places).
A machine cost $2,550 on January 1, 2014, and $3,930 on January 1, 2018. The average inflation rate over these four years was 7% per year. What is the true percentage increase in the cost of the machine from 2014 to 2018? (a) 14.95% (b) 54.12% (c) 7.00% (d) 17.58% (e) 35.11%.
J 7 Q1. An economy is experiencing inflation at an annual rate of 5.6%. If this continues, what will a P500 bill in 2008 be worth in 2020 in terms of 2008s Peso value? Q2. Krista deposits P20,000 in a bank account at 4.4% compounded quarterly for 5 years. If the inflation rate of 5% per year continues for this period, calculate the purchasing power of the original principal.
A friend is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retirement spending goals. Years until retirement: 30 Amount to withdraw each year: $120,000 Years to withdraw in retirement: 25 Interest rate: 7.5% Because your friend is planning ahead, the first withdrawal will not take place until one year after she retires. She wants to make equal annual deposits into her account for her retirement fund. Assume that the inflation rate is 3%. Consequently, when your friend retires she will want to withdraw $120,000 each year in today’s dollars. What amount is she planning to receive in year 31 (the end of her first year of retirement)?
You just made an investment in an insurance policy that is guaranteed to pay you $2.3 million 20 years from now provided you live that long. What will be the purchasing power of that amount with respect to today’s dollars if the market interest rate is 8% per year and the inflation rate stays at 4.7% per year over the 20-year period? The purchasing power of this amount is $ .
If you deposit $12,000 in a bank account that pays a 4% interest compounded monthly for five years, what would be your economic loss if the general inflation rate is 5% during that period?
You are saving to buy a car which in 2022 costs $30,000. You intend to make 36 equal consecutive payments to an account starting one month from now. The interest rate is .5% per month, compounded monthly. If the inflation rate is 4% per year compounded annually, how much in actual dollars should the periodic payments be.
You may pay $15,000 for an annuity that pays $2500 per year for the next 10 years. You want a real rate of return of 5%, and you estimate inflation will average 6% per year. Should you buy the annuity?