Log in
Accounting
1
answer
0
watching
34
views
23 Nov 2019

Please provide detailed steps.

Your employer offers a 401K plan. Your current salary is 56,000. Your employer will match 50% up to 6% of your annual pay.

1. If you start(ed) investing 8% of your base salary at the age of 30 and anticipate an annual raise of 3%, how much money will you have saved for your retirement at age 65? Assume an annual growth rate of 8% and monthly contributions.

2. If you want to draw 70% of your final pay check each year, how long will your money last?

3. If you wanted to leave $100,000 to your favorite charity upon your demise, how long would your money last?

Watch
1
answer
0
watching
34
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Get unlimited access
Already have an account? Log in
Share

Related questions

CORP FIN FINAL PT D

25. You want to have $1 million in your savings account when you retire. You plan on investing a single lump sum today to fund this goal. You are planning on investing in an account which will pay 7.5% annual interest. Which of the following will reduce the amount that you must deposit today if you are to have your desired $1 million on the day you retire (there could be more than one answer)?

A. Invest in a different account paying a higher rate of interest. B. Invest in a different account paying a lower rate of interest. C. Retire later. D. Retire sooner.

26. In calendar 2018, you earned a salary of $55,000. You expect to be given 4% annual merit increases on January 1 of each year for the foreseeable future. What is your projected annual salary in 2023? (Show calculation)

27. You have won a contest that will pay you $10,000 a year at the end of each of the next 5 years. Based on a discount rate of 8% per year, what is the annuity worth to you today? (Show calculation)

1. How much should you be willing to pay for one share of stock if the company just paid a $2.75 dividend, you expect the dividends to increase by 5% annually, and you need a 14% return on your investment? (Show calculation)

1. What is the net present value of a project that has an upfront cash outlay of $30,000, and generates cash inflows of $15,000 in year 1, $20,000 in year 2, and $25,000 in year 3 assuming that the company’s cost of capital is 12.5% per year? (Show calculation)

45. You are depositing $18,000 in a retirement account today and expect to earn an average return of 6% per year on this money. How much additional income will you earn if you leave the money invested for 24 years instead of just 20 years?

PLEASE SHOW YOUR WORK NO SCREEN SHOTS OR IMAGES OF RESPONSE. PLEASE TYPE YOUR ANSWER OR UPLOAD DOCUMENT IF REQUIREMENTS MENTIONED ABOVE ARE NOT MET I WILL GIVE A NEGATIVE RATING

Please provide the value for each component N= , I=, PV=, FV=,etc so I can learn how to do it in the calculator. thank you

Annuity payment for expected Future Value
6. You wish to retire with $5 Million in 38 years. Youestimate you will earn 8% annually on your

investments. How much must you invest each year in order toreach your goal?a) Ordinary (1st payment made at the end of theyear)b) Due (1st payment made today)

7. You would like to withdraw $80,000 per year duringretirement. You expect to live 20 yearsafter you retire at age 65.How much do you need to have saved by the time you retire if youcan

earn 4% on your funds?


Present Value of an Annuity
8. As part of an agreement for investing in a start-upcompany, you will receive $10,000 at the endof each year for thenext 3 years. If the agreed upon interest rate is 15%, what is theamount of

money you are required to invest.

9. Part A) From the sale of your family property, youwill receive $25,000 today and again eachyear for the next 15years. If the discount rate is 7%, compute the present value ofyour future

payments.Part B) Instead of receiving annual payments, you couldreceive $200,000 lump sum. Should youtake the lump sum instead?


Perpetuity
10. You plan to purchase a small service company. Youanticipate receiving annual cash flows of$60,000 per yearindefinitely. (A) If you require an 8% return on your investment,what is themost you should pay for this company? (B) What is theNPV if you can purchase it for $500,000?

Part I:
Solve 4 of the following time value of money problems by filling inthe 4 columns to the right of the description.
Be sure to solve 1 problem from each of the following 4 categorieslisted under Problem Types. I have completed the first row as anexample.

Part II:
Discuss how you may use time value of money concepts in yourpersonal life. For example, saving for college tuition orretirement, paying off a car loan or home mortgage. Give specificdetails as to how you would use these formulas for more effectivedecision making. Create 1 description and fill in the table foryour newly created question.

Problem Types:
1 pv = present value of $1
2 fv = future value of $1
3 PVAo = Present Value of an Ordinary Annuity of$1 (payment at end of period)
4 FVAo = Future Value of an Annuity of $1(payment at end of period)

Description Type of Problem Table Formula Answer
1 How much money must your rich unclegive you now to finance four years of college, assuming an annualcost of $48,000 and an interest rate of 6% (applied to theprincipal until disbursed)? Present Value of anordinary Annuity PVAo PV = 48,000(3.465) $166,325.07
2 How much interest would you earn ifyou deposited $300 at 6 percent for 27 months?
3 If you deposit $2,000 in a 5-yearcertificate of deposit at 5.2%, how much will it be worth in fiveyears?
4 How much interest would you pay toborrow $670 for eight months at 12 percent?
5 You wish to borrow $18,000 to buy anew auto-mobile. Rate is 8.6% over five years with monthlypayments. Find the monthly payment.
6 What is the future value of $800 at8 percent after six years?
7 How much would you have in savingsif you kept $200 on deposit for eight years at 8% compoundedsemiannually?
8 You choose to invest $50/month in a401(k) that invests in an international stock mutual fund. Assumingan annual rate of return of 9%, how much will this fund worth ifretiring in forty years?
9 What is the future value of anannual deposit of $230 earning 6 percent for 15years?
10 If you invest $600/Year in a 401(k)that invests in an international stock mutual fund. Assuming anannual rate of return of 9%, how much will this fund worth ifretiring in forty years?
11 What amount would you have in aretirement account if you made annual deposits of $375 for 25 yearsearning 12 percent, compounded annually?
12 What is the present value of $2,200earning 15 percent for eight years?
13 How much money must you set asideat age 20 to accumulate retirement funds of $100,000 at age 65,assuming a rate of interest of 7%?
14 To have $6,000 for a child’seducation in 10 years, what amount should a parent deposit in asavings account that earns 12 percent, compoundedquarterly?
15 If you deposit $2,000 in a 5-yearcertificate of deposit at 5.2% with quarterly compounding, how muchwill it be worth in five years?
16 What is the present value of awithdrawal of $200 at the end of each year for 14 years with aninterest rate of 7 percent?
17 How much would you have to depositnow to be able to withdraw $650 at the end of each year for 20years from an account that earns 11 percent?
18 What would be the annual paymentamount for a $20,000, 10-year loan at 7 percent?

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in