Grady Zebrowski, age 25, just graduated from college, accepted his first job with a $53,000 salary, and is already looking forward to retirement in 40 years. He assumes a 3.2 percent inflation rate and plans to live in retirement for 20 years. He does not want to plan on any Social Security benefits. Assume Grady can earn a 7 percent rate of return on his investments prior to retirement and a 5 percent rate of return on his Investments post-retirement to answer the following questions using your financial calculator a. Grady wants to replace 90 percent of his current net income. What is his annual need in today's dollars? b. Using the table B. Grady thinks he might have an average tax rate of 13 percent at retirement if he is married. Adjusting for taxes, how much does Grady really need per year, in today's dollars? c. Adjusting for inflation, how much does Grady need per year in future dollars when he begins retirement in 40 years? d. if he needs this amount for 20 years, how much does he need in total for retirement? e. How much does Grady need to save per month to reach his retirement goal assuming he does not recelve any employer match on his retirement savings? Compound Bum of $1 (FVIF) n = 20 n = 40 2.00% 1.4859 2.2080 12.10% 1.51542.2963 2.20% 1.54532.3880 2.30% 1.5758 2.4833 2.40% 1.60692.5822 2.50% 1.63862.6851 2.60% 1.67092.7919 2.70% 1.70382.9028 2.80% 1.7372 3.0180 12.90% 1.77143.1377 3.00% 1.8061/3.2620 3.10% 1.8415 3.3911 3.20% 1.8776|3.5252 3.30% 1.91433.6645 3.40% 1.9517 3.8091 3.50% 1.9898 3.9593 (3.60%2.02864.1152 13.70% 2.0681|4.2771 13.80% 2.10844.4452 13.90% 2.1494 4.6198 4.00% 2 191 14.8010 14.10% 2.2336|4.9892 11.20% 2.27705. 1845 Proof APIRA in 2040 11.00% 18.0480 32 347 11.10% 17 A037 32 2106 1:20% 17.6873 31.6208 11.30% 17.8120 31.0372 1.40%|17.339130.4692 1.60% 17.1688 20.9168 1.60% 17.0006 29.3788 1.70% 16.8349 28.8517 1.80% 16.6716 28.3401 1.90% 16.610327.8414 2.00% 16.35 14 27.3556 2.10% 16.194726.8818 2.20% 16.0402 26.4200 12.30% 15.887825.9898 12.40% 15.7374 25.5309 2.50% 15.589225. 1028 2.60%|15.4429246853 2.70% 15.298824.2780 2.80%|16.156323.8807 2.90% 15.0160123.4930 3,00% 14.8775|23. 1148 3.10% 14.7409 22.7456 3. 20% 14.606122.3853 3.30% 14.4731|22.0336 3.40% 14.341921.6903 3.50% 14-2124 21.3551 3,60% 14.0847 21.0277 3.70% 13.9586 20.7080 3.80%138342 20.3958 3,90% 13.7115 20.0908 4,00513 5003 19928 4.10% 13:470819.50 16 2013 352819.2171 H30713236018.0390 144023.12.14 1.3 14.50913.0079104010 4,0012.306018. 1418 14,70% 12.785417879 80912.670317,6995 1101112.50367 DE00512.46221701591 Monthly Installment Loan Tables ($1,000 loan ith Interest payments compounded monthly) n = 240 n = 480 6 462.0409|1991.4907 7 520.9267 2624.8134 8 589.02043491.0078 9 667.8869 4681.3203 10759.3688|6324.0796 11865.6380 8600.1272 12 989.2554 11764.7725 a. Grady's annual need in today's dollars is $. (Round to the nearest dollar.) (Round to the neare b. Adjusting for taxes, the amount Grady needs per year. In today's dollars is $ dollar.) C. Adjusting for intiation, the amount Grady needs per year in future dollars when he begins retirement in 40 years is $. (Round to the nearest dollar.) d. Since he needs this amount for 20 years, the total he needs for retirement is $. (Round to the nearest dollar) e. To reach his retirement goal assuming he does not receive any employer match on his retirement savings, Grady will need to save $ per month. (Round to the nearest dollar)
