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Roman just retired, and has $700,000 to invest. A very safe Certificate of Deposit (CD) account pays 2%, while a riskier bond fund pays 6% in interest. Roman figures he needs $25,000 a year in interest to live on. How much should he invest in each account to make enough interest while minimizing his risk?
$ at 2%
$ at 6%
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- Whitney recently retired, and has $450,000 in savings. She wants to invest as much as possible in a safe CD account paying 1.1% interest, and as little as possible in a riskier bond paying 5.6% interest. She needs to earn $16,200 a year in interest to cover expenses above SSI. How much should she invest in each account?$ in the CD at 1.1%$ in the bond at 5.6%Candy has $70,000 to invest and wants an annual return of $2800, which requires an overall rate of return of 4%. She can invest in a safe, government-insured certificate of deposit, but it pays only 2%. To obtain 4%, she agrees to invest some of her money in noninsured corporate bonds paying 7%. How much should be placed in each investment to achieve her goal?Charlie Brown, a 25 year old professional, invests $200 a month in the XYZ Capital Opportunity Fund, which has a 10-year average return of 8.75%. a. Charlie wants to estimate what he will have for retirement when he is 60 years old if the rate stays constant. Assume monthly compounding. b. if Charlie makes no further deposits and makes no withdrawals after the age 60, how much will he have for retirement at age 65?
- Tran Jiang has $2,000 to invest. Usually, he would deposit the money in his savings account, which earns 6% interest compound monthly. However, he is considering three alternative investment opportunities: Purchase a bond for $2,000. The bond has a face value of $2,000 and pays $100 every 6 months for three years, after which time the bond matures. Buying and holding a stock that grows 11% per year for 3 years. Making a personal loan of $2,000 to a friend and receiving $150 per year for 3 years. Determine the equivalent cash flows for each option and select the best option.Betsy, a recent retiree, requires $6,000 per year in extra income. She has $70,000 to invest and can invest in B-rated bonds paying 17% per year or in a certificate of deposit (CD) paying 7% per year. How much money should be invested in each to realize exactly $6,000 in interest per year? ( I didn't know if you could write the step to step process. I find that helpful as I study, thankyou)N. Ebriate, a college student at a party university, decides to forego beerdrinking and invest the $100 he saves at the end of each month in a mutualfund that is currently earning 11 percent annually. He has a job where heearns income and invests this money in a Roth IRA.a. How much will he have in his fund in 4 years on graduation?b. If he graduates at 22 and leaves this investment in the mutual fund withoutadding any additional funds, how much will he have at age 60?c. If he really enjoys his work and decides to leave the money in the fund untilage 75, how much will he have?d. If he never touches this mutual fund and dies at the age of 90, how muchwill he leave in his estate from only this investment?
- Don Hildebrand is trying to decide whether to invest money in a bank or in something a little riskier that will pay a higher return. One very simple investment promises to pay a minimum of 8% compounded annually, but he must leave all of the money and interest invested for 9 years. How much interest will Don earn during the 9 years if he invests $7,150 and the investment pays the minimum?James is currently 25 years old and earns $40,000 a year. His boss has promised that he will get a raise at 3% per year. James has recently won $100,000 off the lottery. He anticipates to retire at age 60. James will invest the $100,000 lottery win through an investment bank into a risk free fund (today). The yearly interest rate that James will receive is 4% (compounded yearly). James also plans to save 5% of his salary every year, and deposit it on a mutual fund every year. He is paid on a bi-weekly basis, but he will deposit his savings on the mutual fund at the end of the year. James expects to earn a return of 6% per year on this investment (compounded on a yearly basis). He will make the first deposit a year from today. His salary this year will be 3% more than $40,000 as the most recent yearly salary he has received is $40,000 per year. He will make his last deposit when he is 60 years old. How much money will James have in his savings when he retires at the age of 60?Mike and Emily each have invested $100, 000 in an investment account. No other contributions will be made to their investment account. Both have the sarne goal; they each want their account to reach $3,000,000 at which time each will retire. Mike has his money invested in risk free securities with an expected return of 12% compounded monthly. Emily has her money invested in a stock fund with an expected return of 15% compounded quarterly. How many years after Emily retires will Mike retire?
- Bart is a college student who has never invested his funds. He has saved $1,250 and has decided to invest the funds in a money market fund with an expected annual return of 4.19%. Bart will need the money in one year. The MMF imposes fees that will cost Bart $24 at the time he withdraws the funds in one year. How much money will Bart have in one year as a result of this investment? (Round to the nearest cent)Marcie has some extra money that she wants to place into a relatively safe investment. Her employer is offering to employees a generous 5% discount for 10-year $5,000 bonds that carry a coupon rate of 6% paid semiannually. The expectation is to match her return on other safe investments, which have averaged 6.7% per year compounded semiannually. (This is an effective rate of 6.81% per year.) Should she buy the bond?Lucky Luis has just won $20,000 and wants to invest it for 12 years. There are three plans available to him. a. A savings account that pays 3¾% per year, compounded daily. b. A money market certificate that pays 6¾% per year, compounded semiannually. c. An investment account that, based on past experience, is likely to pay 8½% per year, compounded annually. If Luis did not withdraw any interest, how much would be in each of the three investment plans at the end of 12 years?
