An investor plans to save 45 years for his retirement with $500 monthly deposits. He plans to live in retirement exactly 30 and withdraw his entire saving in equal monthly withdrawals. In the saving years, he expects 9% annual rate of return and in the retirement years 3% annual rate of return. Calculate the equal monthly withdrawals in his retirement years.
Q: Suppose a stock had an initial price of $50 per share, paid a dividend of $1.05 per share during the…
A: To calculate the percentage total return we will use the below formula Percentage total return =…
Q: You own a portfolio equally invested in a risk-free asset and two stocks (If one of the stocks has a…
A: A portfolio is a collection of stocks whose purpose is to provide the best return while at the same…
Q: 13. Consider otherwise comparable 1 year and 2 year zero-coupon bonds. Both bonds have a face value…
A: Bonds are debt instruments that provide the issuer with capital from its investors. It is different…
Q: A coupon bond that pays interest of 4% annually has a par value of $1,000, matures in 5 years, and…
A: Bonds are debt securities issued by the Government or other companies, who seek to raise money from…
Q: What is the area of this figure? 1 m 1 m 2 m 2 m 6 m 4 m Write your answer using decimals. Use 3.14…
A:
Q: You are trying to determine the WACC for a company. It has the following characteristics. a. The…
A: Total debt = $600 mm Shares issued = 45 mm Treasury stock = 10 mm Current price = $19.45 Pre tax…
Q: The Performance Fund had returns of 19% over the evaluation period and the benchmark portfolio…
A: Given the following: Return on Performance fund, Rp = 19% Risk free rate of return, Rf = 8%…
Q: Write a note on Core Banking ,its features and benefits
A: Core banking is a service provided by banks that lets customers access their accounts and carry out…
Q: 2. * A bond with a redemption value of £100 pays coupons of £1.50 semi-annually (i.e. the bond…
A: Bond: The bond price is the present/current value of future coupons and the par value discounted at…
Q: A 3-month zero-coupon bond is selling for $99.5 and a 10-year zero-coupon bond is selling for $64.3.…
A: Data given: Selling price for 3-month Zero coupon bond=$99.5 Selling price for 10-year Zero coupon…
Q: The expected return on the market is 15% with a standard deviation of 12.5% and the risk-free rate…
A: Explanation : If the Expected return from the stock is equal to actual return from the stock it…
Q: Sidney took a $300 cash advance by using checks linked to her credit card account. The bank charges…
A: Credit Card: It represents a product issued by the banks allowing the cardholders to borrow funds…
Q: The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: You have just been offered a commercial paper with a face value of ¢45,000,000 which bears a…
A: Commercial paper is a type of short-term, unsecured debt instrument that is issued by corporations,…
Q: The following graph plots the current security market line (SML) and indicates the return that…
A: As per Capital Asset Pricing Model, the return of a stock is the summation of risk-free rate of…
Q: On May 1, 2004, we requested a loan from Banamex for the amount of $250,000.00, payable in 16…
A: Here, Loan Amount is $250,000.00 Time Period of Loan is 16 months Interest Rate is 1.5% per month
Q: The Flemings secured a bank loan of $400,000 to help finance the purchase of a house. The bank…
A: A loan is amount borrowed to meet certain requirements. The loan can be amortized over the period o…
Q: What is the firm's current stock price if constant growth rate of 8% annually to infinity issued?
A: The price of a stock is the PV of future dividends discount at the required rate of return. We can…
Q: Tim Houston purchased a wall unit for $2,200. He made a $800 down payment and financed the balance…
A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…
Q: which of the following ways do Fedwire payments differ from ACH payments? 1. Fedwire payments are…
A: ACH is automatic clearing house which is said to be electronic fun transfer system that is used to…
Q: In the context of marketing mix, which of the following aspects of customer value is closely…
A: The marketing mix is a set of tactics or variables that a business uses to promote…
Q: You bought a 5-year, 8.29% semi-annual coupon bond today and the current market rate of return is…
A: Step 1 The current discounted value of a bond's potential future cash flow is its price. It refers…
Q: Problem 9: A young engineer bought second hand car worth 15B, CDE.00 if paid in cash. On the…
A: First, let us put numbers to the alphabets A=1 B=5 C=7 D=6 E=8 Car worth = 15B,CDE =…
Q: (Related to Checkpoint 6.1) (Annuity payments) A firm borrows $20,000 from the bank at 13 percent…
A: Annual payment refers to an amount that is paid on yearly basis for the repayment of loan amount…
Q: Computer stocks currently provide an expected rate of return of 21%. MBI, a large computer company,…
A: Growth Rate is rate which shown the percentage change in dividend / price of the stock. Higher the…
Q: Storico Co. just paid a dividend of $2.00 per share. The company will increase its dividend by 20…
A: The Dividend Discount Model (DDM) is a valuation method used to estimate the intrinsic value of a…
Q: Imagine you’re renting an apartment with a friend after high school. Your friend wants to get…
A: A person’s credit history is a record of that person’s use of credit over time. This determines a…
Q: A grocery store is selling hamburger at $1.35 per pound (Ib). What is the price of 3 pounds (Ibs )…
A: In the given case, we have provided the selling price of per pound hamburger . So, the price of 3…
Q: You use the Black-Scholes-Merton model for a put option on a stock. You calculate N(d1) = 0.60 and…
A: Black-Scholes Merton Model: This model is used to compute the price of options contracts. The…
Q: Elizabeth purchased an annuity in 2010. She paid $75,000 for the annuity. She is not going to…
A: To determine the tax treatment of Elizabeth's annuity payments, we need to calculate the exclusion…
Q: Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…
A: The financials associated with a new grill have been given. The operating cash flows in each of the…
Q: Perform a financial analysis for a project using the format provided in Figure 4-5. Assume that the…
A: ROI: It represents the return made on an investment over a period of time and is expressed in…
Q: Which among these alternatives would you prefer, assuming the payout period is 10 years and your…
A: Present Value "PV" of each of the options needs to be determined, the option with highest will be…
Q: 12. Suppose that 1-year bonds currently offer a nominal yield to maturity of 4% (1,0 = 0.04),…
A: Yield to maturity (YTM) of various maturities are known. The yield curve has to be plotted. Several…
Q: Q. No: 02 RAK Enterprise has a total asset of $40,000,000 and financial leverage of 52%. LTL…
A: The maximum rate at which a business can expand without needing to raise more equity or incur more…
Q: Find the interest on the following loan. $5324 at 8%; loan made on August 12 and due December 15 The…
A: Number of days from August 12 to December 15 = 19+30+31+30+15 = 125 days
Q: A $1,000 bond originally issued at par maturing in exactly ten years bears a coupon rate of 8%…
A: Yield To Maturity: It represents the expected rate of return on the bond for the bondholders…
Q: Which of the following statements about the expression of emotions during business meetings is true?…
A: Answer to the question is given below :
Q: stock price is currently $100. you buy a put option with a strike price of $85 and premium $2.50…
A: Strike price = $85 Premium = $2.50 To break even on the put option strategy, the stock price should…
Q: 2. An analyst has estimated the following probabilities for gross domestic product growth next year:…
A: Explanation : Gross domestic product growth rate is the also known as the Economic growth rate. It…
Q: 16. What annual rate r compounded continuously is equivalent to a nominal rate of 6% compounded…
A: We first need to determine the effective annual rate of semiannual compounding by using the formula…
Q: How is it the operating Cash flow is positive if Earnings Before Interest and Tax is a negative…
A: EBIT=Sales - Variable Cost - Fixed Cost -Depreciation Purpose of subtracting depreciation is to…
Q: The stock of Company A gained $6.65 throughout the day and ended at a value of $101.65. By what…
A: Percentage gain will be calculated using formula : % Gain = Gain Initial Price × 100 And…
Q: Mr. Mogi borrowed $9000 for 10 years to make home improvements. If he repaid a total of $20,000 at…
A: Explanation : Future Value is that which includes the interest and principal amount which was…
Q: Consider a borrow-and-invest strategy in which you use $1 million of your own money and borrow…
A: The borrow and invest strategy involves borrowing funds, typically through loans or credit cards,…
Q: You hold an annual coupon bond for 1 year, receiving the 0.14 coupon before selling. When bought it…
A: A bond is an instrument where the company raises debt capital from investors instead of traditional…
Q: WACC 2021: WACC= (Cost of equity x Equity Weight) + (Cost of debt x Debt Weight) WACC= (6.59% x…
A: The Weighted Average Cost of Capital (WACC) is the average cost of financing a company's assets,…
Q: A metallurgist purchases a car for total cost including tax and license of $31,795.66. If the…
A: Compound = monthly = 12 Present value = pv = $31,795.66 Time = t = 4 * 12 = 48 month Interest rate =…
Q: H1. Optimal Capital Budgeting (Capital Expenditure valuations) Dandy Panda´s Japan affiliated…
A: To determine Dandy Panda's Japan optimal capital budget, we need to calculate the cost of each…
Q: 1.1. Find the annuity and interest Periodic Deposit- $2000 at the end of every three months…
A: Two different unrelated problems appear on the screen. Though they are different otherwise, the…
An investor plans to save 45 years for his retirement with $500 monthly deposits. He plans to live in retirement exactly 30 and withdraw his entire saving in equal monthly withdrawals. In the saving years, he expects 9% annual rate of return and in the retirement years 3% annual rate of return. Calculate the equal monthly withdrawals in his retirement years.
Step by step
Solved in 3 steps
- 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 annuityAfter retirement, you expect to live for 25 years. You would like to have a $95,000 income each year. The annual interest rate is 9 percent per year. Required: Calculate the amount of savings you have in your retirement account to receive this income. A) Assume that the payments start on the day of your retirement. B) Assume that the payments start one year after the retirement.You plan on retiring in 25 years. In order to increase your retirement income, you open a retirement. account today and make a $20,000 deposit. In addition, you will deposit $5,000 every year for the next 25 years. Your plan is to start making annual withdrawals of $50,000 from the account, after you retire. Assuming the account is earning 7% rate of interest, how many years will it take, after you retire, before. the funds in your account are completely exhausted. Please include a written answer in a text box. (Assume annual compounding)
- Suppose you wish to retire forty years from today. You determine that you need $50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% per year on your retirement funds and that you will need funds up to 25 years after retirement. Use the PV of an ordinary annuity due formula. a) Calculate the amount you must deposit in an account today so that you have enough funds for retirement b) Calculate the amount you must deposit each year, starting one year from today, so that you have enough funds for retirement.After retirement, you expect to live for 25 years. You would like to have a $95,000 income each year. The annual interest rate is 9 percent per year. Required: Calculate the amount of savings you have in your retirement account to receive this income. 1 Assume that the payments start on the day of your retirement. 2.Assume that the payments start one year after the retirement.Sam invests $100 each month into his retirement account. He wants to determine how much will accumulate in his retirement account if he invests for the next 10 years if he can get a 6% return. How would he do this? Group of answer choices This is a future value of an annuity with a .5% interest rate and 120 payments This is a future value of $1 with an interest rate of 6% and 10 time periods. This is a future value of $1 with an interest rate of .5% and 120 time periods. This is a future value of an annuity with a 6% interest rate and 10 payments
- To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal annual end-of-year deposits into an account paying 8 percent annual interest.a. How large must the annual deposits be to create the $220,000 fund by the end of 42 years?b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the forty-second year?You plan to retire 35 years from today. In retirement, you will withdraw $200,000 from your retirement account each year for 30 years. You will make the first withdrawal 36 years from today. During your 35-year saving period, you expect to earn a rate of return of 8% compounded monthly. During your 30-year retirement period, you expect to earn a rate of return of 5% compounded annually. How much will you need to deposit at the end of each month, making the first deposit 1 month from now, in order to meet your retirement goal? You should first compute the amount that you will need to in the account when you retire That will provide you with the data to calculate the monthly investment required during your savings years. ANSWERAlex Arnold has just turned 65. He has $100,000 to invest in a retirement annuity. One investment company has offered to pay Alex $10,000 per year for 15 years (payments to begin in one year) in exchange for an immediate $100,000 payment. If Alex accepts the offer from the investment company, what is his expected return on the $100,000 investment (assume a return that is compounded annually)? Present value tables or a financial calculator are required. Select one: a. between 5 and 6 percent b. between 7 and 8 percent c. between 8 and 9 percent d. between 6 and 7 percent
- To supplement your retirement, you estimate that you need to accumulate $290,000 exactly 41 years from today. You plan to make equal, end-of-year deposits into an account paying 8% annual interest. a. How large must the annual deposits be to create the $290,000 fund by the end of 41 years? b. If you can afford to deposit only $800 per year into the account, how much will you have accumulated in 41 years?You want to begin saving for your retirement. You plan to contribute $12,000 to the account at the end of this year. You anticipate you will be able to increase your annual contributions by 3% each year for the next 45 years. If your expected annual return is 8%, how much do you expect to have in your retirement account when you retire in 45 years?You want to be able to withdraw $50,000 from your account each year for 20 years after you retire. You expect to retire in 25 years. If your account earns 8% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?