Jenny Gumbles is a 40-year-old dolphin trainer. She earns $80,000 a year and has a 10-year-olddaughter named Gertrude. She has asked for your help to figure out her retirement plan. Jennycurrently has $55,000 in her retirement account, and she wants to retire in 25 years. Shecontributes $5000 to her account each year. 50% of her investment portfolio is in low risk, lowreturn bonds, and the other 50% is in moderate risk, higher return stock index funds. Overall, herinvestments have earned 5% per year, which is what she expects to continue until she retires. Withthis information, you calculate that Jenny will have $424,885.02 when she retires. Jenny issurprised and disappointed by this, so she asks you for advice on how to have more money whenshe retires.1. For each of the TVM variables in her current plan (Rate, NPER, PMT, PV), should Jenny increaseor decrease that variable to have more money when she retires?2. Think about the real steps Jenny would have to do to change these variables. Which variable (orvariables) would be hardest (or most impractical or unpleasant) to change by a decent amount(such as 10-20%)? Why?3. Which variable (or variables) would be easiest (or least impractical or unpleasant) to change by10-20%? Why?4. Overall, what would you recommend she do? Why? (note: If you have time for it you can playaround with the numbers to suggest some specific numbers/changes, but it's not required. Ithink one person did it last year.)

Future value of the investment depends on the interest rate and time period and amount being…

Answered: She earr a year and has hter named…

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 1FPC

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