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2. 3. 4. You are saving for retirement. To live comfortably, you decide you will need to save $4 million by the time you are
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You are saving for retirement. To live comfortably, you decide you will need to save $4 million by the time you are 65 . Today is your 33 rd birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into a savings account. If the interest rate is 4%, how much must you set aside each year to make sure that you will have $4 million in the account on your 65 th birthday? The amount to deposit each year is $ (Round to the nearest dollar.) You have just turned 22 years old, received your bachelor's degree, and accepted your first job. Now you must decide how much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7.1% per year. You cannot make withdrawals until you retire on your 65th birthday. After that, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65 . You estimate that to live comfortably in retirement, you will need $120,000 per year, starting at the end of the first year of retirement and ending on your 100 th birthday. You will contribute the same amount to the plan at the end of every year that you work. How much do you need to contribute each year to fund your retirement? Your annual contribution should be $ (Round to the nearest cent.) Your grandmother bought an annuity from Great-West Life Insurance Company for $345,245 when she retired. In exchange for the $345,245, Great-West will pay her $50,000 per year until she dies. The interest rate is 6%. How long must she live after the day she retired to come out ahead (that is, to get more in value than what she paid in)? She must live at least years. (Round up to the nearest whole year.) When you purchased your car, you took out a five-year annual-payment loan with an interest rate of 5.7% per year. The annual payment on the car is $4,700. You have just made a payment and have now decided to pay off the loan by repaying the outstanding balance. What is the payoff amount for the following scenarios? a. You have owned the car for one year (so there are four years left on the loan)? b. You have owned the car for four years (so there is one year left on the loan)
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