PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
6th Edition
ISBN: 9781337118026
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 14, Problem 6FPE
Summary Introduction
To compare: The both retirement plans and discuss the features of each plan.
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A client needs assistance with retirement planning. Here are the facts:
The client, Dave, is 21 years old. He wants to retire at 65.
Dave has disposable income of $2,000 per month.
The IRA Dave has chosen has an average annual return of 8%.
Question 1. If Dave contributes half of his disposable income to the account, what will it be worth at 65?
Question 2. How much would he need to contribute to have $5,000,000 at 65?
Samantha Montgomery (age 42) is employed by Canon Company and is paid an annual salary of $62,430. She has just decided to join the company's Simple Retirement Account (IRA form) and has a few questions. Answer the following for Montgomery: Round your answer to the nearest cent.
a. What is the maximum that she can contribute into this retirement fund?
$fill in the blank 1
b. What would be the company's contribution?
$fill in the blank 2
Note: For items c. & d. below, round interim amounts to two decimal places. Use these values in subsequent computations then round final answer to two decimal places.
c. What would be her weekly take-home pay with the retirement contribution deducted (married, 2 allowances, wage-bracket method, and a 2.3% state income tax on total wages)?
Click here to access the Wage-Bracket Method Tables.
$fill in the blank 3
d. What would be her weekly take-home pay without the retirement contribution deduction?
$fill in the blank 4
(Solving for r with annuities)
Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows
If Nicki could earn 11 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why?
a. What rate of return could Nicki earn on her money if she place it in annuity A with
$6500 payment per year and 16 years duration?
Chapter 14 Solutions
PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
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