Assume you want to retire early at age 52. You plan to save using one of the following two?strategies: (1) save $2,700 a year in an IRA beginning when you are 27 and ending when you are 52 ?(25 ?years) or?(2) wait until you are 37 to start saving and then save $4,500 per year for the next 15 years. Assume you will earn the historic stock market average of 10?% per year.
1.How much?out-of-pocket cash will you invest under the two?options?
Calculate how much?out-of-pocket cash you will invest under the two options.
Option one=?
Option two=?
2.How much savings will you have accumulated at age 52 under the two?options?
Calculate the total amount of savings that you will have accumulated at age 52 under the two options.
Option one=?
Option two=?
3.The strategy involving earlier savings or later savings grows substantially larger over time. This is due to the fact that the savings are invested later or sooner, so time does the work.
4.If you were to let the savings continue to grow for ten more years?(with no further?out-of-pocket investments), under each?scenario, what will the investment be worth when you are age?62?
Calculate the total amount of savings at age?62, with no further?out-of-pocket investments, under each scenario. ?
Option one=?
Option two=?
0 Reference Future Value ofAnnu'rty of $1 erioda 1% 2% 3% 4% \"M 20% rind 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 rind 2 2.010 2.020 2.030 2.040 2.050 2.000 2.000 2.100 2.120 2.140 2.100 2.100 2.200 rind 3 3.030 3.000 3.001 3.122 3.153 3.104 3.240 3.310 3.3?4 3.440 3.500 3.5?2 3.040 rind 4 4.000 4.122 4.104 4.240 4.310 4.3?5 4.500 4.041 4.??9 4.921 5.000 5.215 5.300 rind 5 5.101 5.204 5.300 5.410 5.520 5.03? 5.00? 0.105 0.353 0.010 00?? ?.154 ?.442 rind 0 0.152 0.300 0.400 0.033 0.002 0.0?5 ?.330 ?.?10 0.115 0.530 09?? 0.442 0.930 rind T ?.214 ?.434 ?.002 ?000 0.142 0.304 0.023 9.40? 10.009 10.?30 11.414 12.142 12.010 rind 0 0.200 0.503 0.002 0.214 0.540 0.00? 10.03? 11.430 12.300 13.233 14.240 15.32? 10.400 rind 0 0.300 9.?55 10.159 10.503 11.02? 11.491 12.400 13.5?9 14.??0 10.005 1?.510 10.000 20.?90 rind 10 10.402 10.050 11.404 12.000 12.5?0 13.101 14.40? 15.03? 1?.549 10.33? 21.321 23.521 25.050 rind 11 11.50? 12.109 12.000 13.400 14.20? 14.0?2 10.045 10.531 20.055 23.045 25.?33 20.?55 32.150 rind 12 12.003 13.412 14.102 15.020 15.91? 10.0?0 100?? 21.304 24.133 2?.2?1 30.050 34.031 30.501 rind 13 13.000 14.000 15.010 10.02? 1?.?13 10.002 21.405 24.523 20.020 32.000 30.?00 42.210 40.49? rind 14 14.04? 15.9?4 1?.000 10.202 19.509 21.015 24.215 2?.0?5 32.303 3?.501 43.0?2 50.010 50.190 rind 15 10.09? 1?.203 10.509 20.024 21 .5?9 23.2?0 2?.152 31.??2 3?.200 43.042 51.000 00.005 ?2.035 rind 20 22.010 24.20? 20.0?0 29.??0 33.000 30.?00 45.?02 5?.2?5 ?2.052 91.025 115.3 00 140.020 100.000 rind 25 20.243 32.030 30.459 41.040 4?.?2? 54.005 ?3.100 00.34? 133.334 101 .0?1 249.214 342.003 4?1.901 rind 30 34.?05 40.500 4?.5?5 50.005 00.439 ?9.050 113.203 104.494 241.333 350.?0? 530.312 ?00.940 1,101.00 rind 40 40.000 00.402 ?5.401 05.020 120.000 154.?02 250.05? 442.593 ?0?.001 1,342.025 2,300.?5? 4,103.213 ?,343.05 4 h i Reference -X Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 Period 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 4.039 3.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.303 4.031 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 4.833 4.494 4.192 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 6.623 5.929 5.353 4.870 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 4.948 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 7.003 6.177 5.517 4.979 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 7.105 6.233 5.548 4.997 Print Donei Reference -X Future Value of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 1.010 1.020 1.030 1.040 1.050 1.060 1.080 1.100 1.120 1.140 1.160 1.180 1.200 Period 2 1.020 1.040 1.061 1.082 1.103 1.124 1.166 1.210 1.254 1.300 1.346 1.392 1.440 Period 3 1.030 1.061 1.093 1.125 1.158 1.191 1.260 1.331 1.405 1.482 1.561 1.643 1.728 Period 4 1.041 1.082 1.126 1.170 1.216 1.262 1.360 1.464 1.574 1.689 1.811 1.939 2.074 Period 5 1.051 1.104 1.159 1.217 1.276 1.338 1.469 1.611 1.762 1.925 2. 100 2.288 2.488 Period 6 1.062 1.126 1.194 1.265 1.340 1.419 1.587 1.772 1.974 2.195 2.436 2.700 2.986 Period 7 1.072 1.149 1.230 1.316 1.407 1.504 1.714 1.949 2.211 2.502 2.826 3.185 3.583 Period 8 1.083 1.172 1.267 1.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 3.759 4.300 Period 9 1.094 1.195 1.305 1.423 1.551 1.689 1.999 2.358 2.773 3.252 3.803 4.435 5.160 Period 10 1.105 1.219 1.344 1.480 1.629 1.791 2. 159 2.594 3.106 3.707 4.411 5.234 6.192 Period 11 1.116 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 Period 12 1.127 1.268 1.426 1.601 1.796 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 Period 13 1.138 1.294 1.469 1.665 1.886 2.133 2.720 3.452 4.363 5.492 6.886 3.599 10.699 Period 14 1.149 1.319 1.513 1.732 1.980 2.261 2.937 3.797 4.887 6.261 7.988 10.147 12.839 Period 15 1.161 1.346 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 Period 20 1.220 1.486 1.806 2.191 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 Period 25 1.282 1.641 2.094 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 Period 30 1.348 1.811 2.427 3.243 4.322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 Period 40 1.489 2.208 3.262 4.801 7.040 10.286 21.725 |45.259 93.051 188.884 378.721 750.378 1,469.772 Print Donei Reference - X Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 Period 10 | 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 Period 11 | 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 Period 14 | 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 0.004 Period 40 | 0.672 0.453 0.307 0.208 0.142 0.097 0.046 |0.022 0.011 0.005 0.003 0.001 0.001 Print Done
