Suppose a person has a retirement investment portfolio that consistently earns 5.1% annually. In retirement they aredrawing $40,000 each year from this account. Calculate the equilibrium value of the retirement investment portfolio.Enter your answer rounded to the nearest $1000 (do not include the $ sign).

Perpetuity is an annuity that continues for an indefinite period. In perpetuity series of cash flows…

Answered: Suppose a person has a retirement…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 34P

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You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Suppose you are planning for retirement. At thebeginning of this year and each of the next 39 years,you plan to contribute some money to your retirementfund. Each year, you plan to increase your retirement contribution by $500. When you retire in 40years, you plan to withdraw $100,000 at the beginning of each year for the next 20 years. You assumethe following about the yields of your retirementinvestment portfolio:■ During the first 20 years, your investments willearn 10% per year.■ During all other years, your investments will earn5% per year.All contributions and withdrawals occur at thebeginnings of the respective years.a. Given these assumptions, what is the least amountof money you can contribute this year and stillhave enough to make your retirement withdrawals?b. How does your answer change if inflation is 2%per year and your goal is to withdraw $100,000 peryear (in today’s dollars) for 20 years?
You are told that if you invest $11,100 per year for 19 years (all payments made at the beginning ofeach year) you will have accumulated $375,000 at the end of the period. What annual rate of return is theinvestment offering
An individual expects his return on an investment to be $10,000 the first year and to increase exponentially at 15% each uear for the next five years. Using a 5% annual interest rate, compute the present worth of the investment using both the year-end and month-end conventions.
You are planning to save for retirement over the next 30 years. To do this, you will invest$700 a month in a stock account and $300 a month in a bond account. The return of thestock account is expected to be 10 percent, and the bond account will pay 6 percent.When you retire, you will combine your money into an account with an 8 percent return.How much can you withdraw each month from your account assuming a 25-yearwithdrawal period?
You are targeting a retirement portfolio value of $1,700,000 in 25 years. You plan to make annual payments at the end of each of those years. You expect your investments to earn an annual return of 7.50% per year. What should your annual payment be to achieve your retirement target? Group of answer choices $26,258.55 $35,011.40 $25,008.14 $23,263.39 $30,009.77
You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a month in an account A and $300 a month in an account B. The return of the stock account is expected to be 11 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a 9 percent return. How much can you withdraw each month from your account assuming a 25-year withdrawal period?
You are planning to save for retirement over the next 35 years. To do this, you will invest $700 a month in a stock account and $350 a month in a bond account. The return of the stock account is expected to be 13.0 percent, and the bond account will pay 6.0 percent. When you retire, you will combine your money into an account with an 11 percent return. How much can you withdraw each month from your account, assuming a 30-year withdrawal period? (Do not round intermediate calculations. Round the answer to 2 decimal places. Omit $ sign in your response.)
You are planning to save for retirement over the next 35 years. To do this, you will invest $770 per month in a stock account and $370 per month in a bond account. The return of the stock account is expected to be 9.7 percent, and the bond account with pay 5.7 percent. When you retire, you will combine your money into an account with a 6.7 percent return. How much can you withdraw each month from your account assuming a 30-year withdrawal period? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16)

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