Business, 03.04.2020 19:57 Hali07

This is a classic retirement problem. A time line will help in solving it. Your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $125,000 from her savings account on each birthday for 20 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 7 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund.
Required:
a) If she starts making these deposits on her 36th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), she must deposit $ annually to be able to make the desired withdrawals at retirement.
b) Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump sum payment on her 35th birthday to cover her retirement needs. This deposit will have to be in the amount of $.
c) Suppose your friend's employer will contribute $3500 to the account every year as part of the company's profit-sharing plan. In addition, your friend expects a $175,000 distribution from a family trust fund on her 55th birthday, which she will also put into the retirement account. She must deposit $ annually now to be able to make the desired withdrawals at retirement.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 01:30

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Answers: 1

Answer

Business, 22.06.2019 02:00

What is an example of a good stock to buy in a recession? a) cyclical stock b) defensive stock c) income stock d) bond

Answers: 1

Answer

Business, 22.06.2019 04:00

Match the type of agreements to their descriptions. will trust living will prenuptial agreement

Answers: 2

Answer

Business, 22.06.2019 05:00

Ajewelry direct sales company pays its consultants based on recruiting new members. question 1 options: the company is running a pyramid scheme, which is illegal. the company is running a pyramid scheme, which is legal. the company has implemented a legal and ethical plan for growth. the company uses this method of compensation to reduce the fee for the product sample kit.

Answers: 3

Answer

You know the right answer?

This is a classic retirement problem. A time line will help in solving it. Your friend is celebratin...

Questions