Jamie Lee and Ross, now 57 and still very active, have plenty of time on their hands now that the triplets are away at college. They both realized that time has just flown by, over twenty-four years have passed since they married! Looking back over the past years, they realized that they have worked hard in their careers, Jamie Lee as the proprietor of a cupcake caf and Ross, self-employed as a web page designer. They have enjoyed raising their family and strived to be financially sound as they are looking to retirement that is just around the corner. They saved regularly and invested wisely over the years. They rebounded nicely from the economic crisis over the past few years, as they watched their investments closely and adjusted their strategies when they felt it necessary. They purchase vehicles with cash and do not carry credit card balances, choosing instead to use them for convenience only. The triplets are pursuing their master's degrees and have tuition covered through work/study programs at the university Jamie Lee and Ross are just a few short years from realizing their goals of retiring at 65 and purchasing a home at the beach! They are reviewing their financial situation to ensure they will be ready for retirement. They anticipate being able to live comfortably with 80% of their current expenses. The rate of return on their investments until they retire is 4%. They expect this percentage to drop to 3% after retirement. Use this information, along with Exhibit 1-A. Exhibit 1-B, and the information provided below to determine the annual deposit amount Jamie Lee and Ross will need to make until they retire in order to make up the shortfall between their estimated expenses and income needed during retirement. Each answer must have a value for the assignment to be complete. Enter "O" for any unused categories Current Expense Amounts (Jamie Lee and Ross Combined) Fixed expenses: $3,000/month Variable expenses: $2,000/month Estimated Income Amounts (Jamie Lee and Ross Combined) Social Security: $2,100/month Current IRA balance: $92,000 Estimated IRA withdrawal: $300/month Other investments: $26,400/year EXHIBIT 1A Future value (compounded sum) of $1 after a given number of time periods Period 1% 2% 8% 9 10% 11% 1 1010 3 1030 1061 1000 1.150 1110 12 1360 1095 1020 1040 1.061 1.082 1.104 1.126 1140 1.172 1.195 1.219 7% 1070 1145 1225 1311 1.403 1.501 1606 1718 18.30 1.967 1.126 1.159 1194 1.230 1267 1305 1344 1.384 1.426 1.489 1100 1210 1.551 14 1611 772 1949 2.144 2.558 2.594 1360 1425 1.450 2105 1020 3 1050 4 1041 5 1051 0 1062 7 1.072 B 1.083 1094 10 1.105 11 1116 12 1.127 1.138 14 1.149 15 1.161 16 1.175 1.184 1.196 19 1.208 20 1.220 25 1.282 30 7.548 40 1489 50 1645 4% 5% 1040 1050 1052 1.103 1.125 1.158 1170 1216 1217 1.276 1265 1540 1316 TAOT 1477 1.551 1620 1.539 1710 1601 1.665 1.886 1.752 1.980 1.801 2.079 1873 2292 2006 2.407 2107 2527 2101 2653 2666 3386 3243 2322 4801 7040 7.107 11.467 1295 1412 1550 1477 1820 7993 2.172 2367 2580 2013 3.006 3:342 3.642 3.970 1700 6% 1060 1.194 1.191 1262 1.350 1419 1504 1594 1609 1,701 1.098 2012 2.135 2261 2.397 2540 2693 2854 3026 3.207 4.292 5743 10.286 18.420 1.260 1.294 1.310 1.346 1.375 1.400 1428 1.457 1513 1558 1060 1166 1260 1360 1:46 1567 1714 1851 1999 2150 2332 2510 2.720 2.937 317 3426 3700 3006 4316 1661 4848 10065 21725 46.902 1.605 os.nmpans 19 2185 15 1370 2076 3305 2556 2.839 3.152 3499 3885 4310 4785 5311 5.00 4544 7265 8062 13585 22892 65.000 184570 1455 2252 2.410 2.579 2759 2952 3.150 3.380 3.617 3.870 5427 7612 1948 1.702 3.150 3452 5797 4177 4505 5.054 5.560 4116 6727 10.555 114 5250 117.390 1754 1485 1641 1011 2.200 2692 4717 5.142 5,604 8.623 13.268 31409 74358 1.806 2,094 2427 3262 4384 14974 20457 Period 12% 1600 2 3 5 ON 9 10 11 13% 1.130 1.277 1445 1630 1842 2002 2.353 2.658 3004 3.395 3836 4355 4898 5555 6.254 7.067 7.986 9024 10.197 11523 21231 39.116 1.120 1254 1.405 1.574 1762 1974 2.211 2478 2775 3.106 5.479 3.896 4.363 4887 5.474 6130 6.866 7600 8613 9.6446 17000 20.950 93.051 289.000 32 13 14 15 14% 1.140 1.300 1.482 1.689 1.925 2.105 2.502 2.855 3252 3907 226 4818 5.492 6.261 7.138 8.137 9.276 10575 12.056 13745 26462 SO 050 188880 700230 15% 16% 17% 18% 19% 20% 25% 3014 2150 1.100 1.170 1.180 1.190 1.300 1.250 1.500 1.373 1.346 1.369 1416 LLO 1565 1521 1.561 1602 1643 1685 1.728 1.955 2.197 1.749 1.811 1939 2005 2074 2441 2856 2011 2.100 2.192 2.280 2.386 2436 3052 3.713 2315 2565 2.700 2.8.0 2086 3.815 2.660 2826 3.001 3.185 3.379 3583 4.768 6276 3059 3278 3511 2750 402) 2300 5950 8.157 3518 3.803 4105 4435 4765 5.160 7451 10.000 40-46 4411 4807 5254 5696 6.192 9373 13785 4.652 5.117 5624 6.176 6.772 7430 17.923 5.350 5.956 6.560 7.260 8064 8.916 14552 6.153 6686 7699 8.500 9506 10.690 1190 30.265 7,076 0.007 10.147 11420 22.737 30374 8.13 0.266 10.559 11.074 13500 15.07 28.422 51.166 0.358 10.74 12.330 14.129 16.172 18.455 0652 10.761 12 468 14426 16.672 19244 22.186 100 3650 12375 14465 16879 19673 22091 26.623 55.511 712.400 14232 16.777 19.740 23214 27252 31040 60380 146.100 16567 19.461 2100 27.393 32429 38538 36.756 100050 40874 50.658 62.600 77.368 95 396 356700 705 60 66.212 85850 111070 143370 134.680 257500 107.700 2620 000 267560 578720 555.670 750 180 1,051.700 1.450.800 7531200 3.119.000 1083.700 1670.700 2,566,200 3927400 3.908 000 0.100.400 70.065.000 497.929.000 7988 12830 35597 25 32.910 40 50 50760 EXHIBIT 1-B Future value (compounded sum) of $1 paid in at the end of each period for a given number of time periods Can annuity) 14 Period 1 2 3 4 5 0 2000 2020 3.000 9 1000 2000 3.276 10% 1000 2100 3510 5.000 2010 3030 4050 5101 0.152 7214 1786 123 % 1000 2110 350 110 62 7915 98 1000 2040 2.122 4246 5.410 6.633 7898 6105 7.216 94 11.45 13510 15.937 9214 1139 14 1955 12 5204 6.305 7.454 8585 9755 10050 12.16 13.412 16660 15.974 17.305 18639 20012 21412 22.841 24293 32030 40.580 60.402 84570 1.000 20:30 3091 4184 5.300 6.466 7662 8.892 10.159 11.464 12.30 14192 15616 17.066 18599 20.157 21.763 25414 25.112 26870 36.450 47.525 75.401 112.800 1000 2.060 184 2375 5637 6975 8.504 897 1141 13181 14972 16870 18.382 21015 25 276 25673 28215 30906 35760 DO2393 5% 1000 2050 3.155 4310 5526 6802 8.10 9.549 11027 12.578 14207 15.917 17.713 10500 21.579 23657 25540 28132 30.550 33066 47.727 66.450 120.800 209 350 10462 11567 12.685 13.800 14947 16097 17258 18.430 19/615 20.811 22019 28245 54785 48.886 4463 7% 1000 2070 3215 4.440 5.751 7.153 3654 10.40 11078 13810 55.784 17.30 20141 22.550 25.129 27888 30 840 33.990 37.379 20.005 61 240 94451 199640 106.530 10583 12.000 13.456 15.026 16627 18292 20024 21.825 2369 25 845 27671 29.776 41.646 56.085 05.026 152.670 21 24525 27.925 31722 1000 2000 3.246 1506 5.667 7.336 1023 10457 12.450 14487 16645 1807 21.495 24215 27.152 30 324 35.750 37.450 41.446 25702 73.100 113280 250.000 573.770 26212 30095 34405 5905 7523 9.200 11020 13.00 15.193 17.500 20:14 22.955 36019 29.361 3500 36.974 41 301 45038 51.160 34701 136310 337.90 315.000 15 17 15 25 10545 LESO 5599 5050 51154 93 5135 SOS 98.340 114410 DO 10000 44250 S10 116000 168300 54365 70.050 154.700 290.340 40 50 Period 1 2 3 4 9.307 19923 26.755 . 7 B 9 10 11 12 13 14 15 16 17 18 12% 13% 14% 16% 17% 19% 20% 25% 30 1000 1.000 1.000 1.000 1000 1000 1000 1000 1000 1000 1000 2120 2.130 2140 2150 2160 2.170 2100 2.100 2200 3:34 3.402 3.440 5.473 3.506 3.530 3572 3.606 361 3.813 3.990 4770 4850 4.921 4993 5.066 5.141 5215 5.291 5368 576 6353 6450 6610 6742 6877 7014 2154 2392 7. 0 DO 8115 1.525 1.536 8.754 8.977 2442 685 9.950 12.75 10089 10.405 10.750 11067 11.414 11.772 12142 12533 12.016 15:07 12.500 12757 13233 13727 14.240 14773 15.327 15902 16.40 1950 3350 14776 15,416 16085 16786 17.519 18.285 19.086 20.700 25.80 332015 17549 18420 19.357 20.304 21.321 22.393 25521 24701 25.95 2010 20655 21814 23015 24549 25.733 27.200 30.104 32.150 56.405 24135 25.650 27.271 20.002 32.824 4931 37180 39581 54200 7637 20.029 29.985 52.080 32352 36,756 39 404 42.210 5244 48.400 52393 34885 37581 10505 13.672 47.105 50.816 SA 59.196 SA 127.970 37.280 10417 45843 47580 51.660 56110 60965 66.261 72035 109600 143290 42.755 46 672 50-980 55714 $0.925 66 649 72830 79 350 15311 21470 48384 53.739 59.110 65.025 71.673 78.970 07.066 96002 105.00 175.830 205010 55.750 61725 68394 75636 M14 93.06 103740 115270 128130 2100 71590 43440 70749 78969 08212 05605 710.200 123.410 156.170 15470 273550 TO 72053 B0947 01.025 102.400 115 380 130030 145.630 165.400 15660 133350 155.620 181870 212.700 249210 292.110 342.000 402040 1980 105400 2.545.500 241 350 293200 356700 434750 530310 66.440 790050 0467001,181.100 27.300 350.000 767090 1015.700 1542.000 1.779 100 2.360.000 13500 4.165210 5.529 07543.900 3000 130.395.000 2.400.000 1450 500 4994500 7217.700 10.456.000 15.000.000 21013000 31515.000 45.297000 58.000 15976000 50350 19 20 25 30 40 50 Estimated Annual Retirement Living Expenses Estimated annual living expenses if retiring today Number of years until retirement Expected annual rate of return before retirement Future value (use Exhibit 1-A) Projected annual retirement living expenses, adjusted for inflation X (A) Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income (B) ) (C) Needed investment fund after retirement (A-B) Number of years until retirement Expected annual rate of return before retirement Future value for a series of deposits (use Exhibit 1-B) Annual deposit to achieve needed investment fund (C/D) (D) Jamie Lee and Ross, now 57 and still very active, have plenty of time on their hands now that the triplets are away at college. They both realized that time has just flown by, over twenty-four years have passed since they married! Looking back over the past years, they realized that they have worked hard in their careers, Jamie Lee as the proprietor of a cupcake caf and Ross, self-employed as a web page designer. They have enjoyed raising their family and strived to be financially sound as they are looking to retirement that is just around the corner. They saved regularly and invested wisely over the years. They rebounded nicely from the economic crisis over the past few years, as they watched their investments closely and adjusted their strategies when they felt it necessary. They purchase vehicles with cash and do not carry credit card balances, choosing instead to use them for convenience only. The triplets are pursuing their master's degrees and have tuition covered through work/study programs at the university Jamie Lee and Ross are just a few short years from realizing their goals of retiring at 65 and purchasing a home at the beach! They are reviewing their financial situation to ensure they will be ready for retirement. They anticipate being able to live comfortably with 80% of their current expenses. The rate of return on their investments until they retire is 4%. They expect this percentage to drop to 3% after retirement. Use this information, along with Exhibit 1-A. Exhibit 1-B, and the information provided below to determine the annual deposit amount Jamie Lee and Ross will need to make until they retire in order to make up the shortfall between their estimated expenses and income needed during retirement. Each answer must have a value for the assignment to be complete. Enter "O" for any unused categories Current Expense Amounts (Jamie Lee and Ross Combined) Fixed expenses: $3,000/month Variable expenses: $2,000/month Estimated Income Amounts (Jamie Lee and Ross Combined) Social Security: $2,100/month Current IRA balance: $92,000 Estimated IRA withdrawal: $300/month Other investments: $26,400/year EXHIBIT 1A Future value (compounded sum) of $1 after a given number of time periods Period 1% 2% 8% 9 10% 11% 1 1010 3 1030 1061 1000 1.150 1110 12 1360 1095 1020 1040 1.061 1.082 1.104 1.126 1140 1.172 1.195 1.219 7% 1070 1145 1225 1311 1.403 1.501 1606 1718 18.30 1.967 1.126 1.159 1194 1.230 1267 1305 1344 1.384 1.426 1.489 1100 1210 1.551 14 1611 772 1949 2.144 2.558 2.594 1360 1425 1.450 2105 1020 3 1050 4 1041 5 1051 0 1062 7 1.072 B 1.083 1094 10 1.105 11 1116 12 1.127 1.138 14 1.149 15 1.161 16 1.175 1.184 1.196 19 1.208 20 1.220 25 1.282 30 7.548 40 1489 50 1645 4% 5% 1040 1050 1052 1.103 1.125 1.158 1170 1216 1217 1.276 1265 1540 1316 TAOT 1477 1.551 1620 1.539 1710 1601 1.665 1.886 1.752 1.980 1.801 2.079 1873 2292 2006 2.407 2107 2527 2101 2653 2666 3386 3243 2322 4801 7040 7.107 11.467 1295 1412 1550 1477 1820 7993 2.172 2367 2580 2013 3.006 3:342 3.642 3.970 1700 6% 1060 1.194 1.191 1262 1.350 1419 1504 1594 1609 1,701 1.098 2012 2.135 2261 2.397 2540 2693 2854 3026 3.207 4.292 5743 10.286 18.420 1.260 1.294 1.310 1.346 1.375 1.400 1428 1.457 1513 1558 1060 1166 1260 1360 1:46 1567 1714 1851 1999 2150 2332 2510 2.720 2.937 317 3426 3700 3006 4316 1661 4848 10065 21725 46.902 1.605 os.nmpans 19 2185 15 1370 2076 3305 2556 2.839 3.152 3499 3885 4310 4785 5311 5.00 4544 7265 8062 13585 22892 65.000 184570 1455 2252 2.410 2.579 2759 2952 3.150 3.380 3.617 3.870 5427 7612 1948 1.702 3.150 3452 5797 4177 4505 5.054 5.560 4116 6727 10.555 114 5250 117.390 1754 1485 1641 1011 2.200 2692 4717 5.142 5,604 8.623 13.268 31409 74358 1.806 2,094 2427 3262 4384 14974 20457 Period 12% 1600 2 3 5 ON 9 10 11 13% 1.130 1.277 1445 1630 1842 2002 2.353 2.658 3004 3.395 3836 4355 4898 5555 6.254 7.067 7.986 9024 10.197 11523 21231 39.116 1.120 1254 1.405 1.574 1762 1974 2.211 2478 2775 3.106 5.479 3.896 4.363 4887 5.474 6130 6.866 7600 8613 9.6446 17000 20.950 93.051 289.000 32 13 14 15 14% 1.140 1.300 1.482 1.689 1.925 2.105 2.502 2.855 3252 3907 226 4818 5.492 6.261 7.138 8.137 9.276 10575 12.056 13745 26462 SO 050 188880 700230 15% 16% 17% 18% 19% 20% 25% 3014 2150 1.100 1.170 1.180 1.190 1.300 1.250 1.500 1.373 1.346 1.369 1416 LLO 1565 1521 1.561 1602 1643 1685 1.728 1.955 2.197 1.749 1.811 1939 2005 2074 2441 2856 2011 2.100 2.192 2.280 2.386 2436 3052 3.713 2315 2565 2.700 2.8.0 2086 3.815 2.660 2826 3.001 3.185 3.379 3583 4.768 6276 3059 3278 3511 2750 402) 2300 5950 8.157 3518 3.803 4105 4435 4765 5.160 7451 10.000 40-46 4411 4807 5254 5696 6.192 9373 13785 4.652 5.117 5624 6.176 6.772 7430 17.923 5.350 5.956 6.560 7.260 8064 8.916 14552 6.153 6686 7699 8.500 9506 10.690 1190 30.265 7,076 0.007 10.147 11420 22.737 30374 8.13 0.266 10.559 11.074 13500 15.07 28.422 51.166 0.358 10.74 12.330 14.129 16.172 18.455 0652 10.761 12 468 14426 16.672 19244 22.186 100 3650 12375 14465 16879 19673 22091 26.623 55.511 712.400 14232 16.777 19.740 23214 27252 31040 60380 146.100 16567 19.461 2100 27.393 32429 38538 36.756 100050 40874 50.658 62.600 77.368 95 396 356700 705 60 66.212 85850 111070 143370 134.680 257500 107.700 2620 000 267560 578720 555.670 750 180 1,051.700 1.450.800 7531200 3.119.000 1083.700 1670.700 2,566,200 3927400 3.908 000 0.100.400 70.065.000 497.929.000 7988 12830 35597 25 32.910 40 50 50760 EXHIBIT 1-B Future value (compounded sum) of $1 paid in at the end of each period for a given number of time periods Can annuity) 14 Period 1 2 3 4 5 0 2000 2020 3.000 9 1000 2000 3.276 10% 1000 2100 3510 5.000 2010 3030 4050 5101 0.152 7214 1786 123 % 1000 2110 350 110 62 7915 98 1000 2040 2.122 4246 5.410 6.633 7898 6105 7.216 94 11.45 13510 15.937 9214 1139 14 1955 12 5204 6.305 7.454 8585 9755 10050 12.16 13.412 16660 15.974 17.305 18639 20012 21412 22.841 24293 32030 40.580 60.402 84570 1.000 20:30 3091 4184 5.300 6.466 7662 8.892 10.159 11.464 12.30 14192 15616 17.066 18599 20.157 21.763 25414 25.112 26870 36.450 47.525 75.401 112.800 1000 2.060 184 2375 5637 6975 8.504 897 1141 13181 14972 16870 18.382 21015 25 276 25673 28215 30906 35760 DO2393 5% 1000 2050 3.155 4310 5526 6802 8.10 9.549 11027 12.578 14207 15.917 17.713 10500 21.579 23657 25540 28132 30.550 33066 47.727 66.450 120.800 209 350 10462 11567 12.685 13.800 14947 16097 17258 18.430 19/615 20.811 22019 28245 54785 48.886 4463 7% 1000 2070 3215 4.440 5.751 7.153 3654 10.40 11078 13810 55.784 17.30 20141 22.550 25.129 27888 30 840 33.990 37.379 20.005 61 240 94451 199640 106.530 10583 12.000 13.456 15.026 16627 18292 20024 21.825 2369 25 845 27671 29.776 41.646 56.085 05.026 152.670 21 24525 27.925 31722 1000 2000 3.246 1506 5.667 7.336 1023 10457 12.450 14487 16645 1807 21.495 24215 27.152 30 324 35.750 37.450 41.446 25702 73.100 113280 250.000 573.770 26212 30095 34405 5905 7523 9.200 11020 13.00 15.193 17.500 20:14 22.955 36019 29.361 3500 36.974 41 301 45038 51.160 34701 136310 337.90 315.000 15 17 15 25 10545 LESO 5599 5050 51154 93 5135 SOS 98.340 114410 DO 10000 44250 S10 116000 168300 54365 70.050 154.700 290.340 40 50 Period 1 2 3 4 9.307 19923 26.755 . 7 B 9 10 11 12 13 14 15 16 17 18 12% 13% 14% 16% 17% 19% 20% 25% 30 1000 1.000 1.000 1.000 1000 1000 1000 1000 1000 1000 1000 2120 2.130 2140 2150 2160 2.170 2100 2.100 2200 3:34 3.402 3.440 5.473 3.506 3.530 3572 3.606 361 3.813 3.990 4770 4850 4.921 4993 5.066 5.141 5215 5.291 5368 576 6353 6450 6610 6742 6877 7014 2154 2392 7. 0 DO 8115 1.525 1.536 8.754 8.977 2442 685 9.950 12.75 10089 10.405 10.750 11067 11.414 11.772 12142 12533 12.016 15:07 12.500 12757 13233 13727 14.240 14773 15.327 15902 16.40 1950 3350 14776 15,416 16085 16786 17.519 18.285 19.086 20.700 25.80 332015 17549 18420 19.357 20.304 21.321 22.393 25521 24701 25.95 2010 20655 21814 23015 24549 25.733 27.200 30.104 32.150 56.405 24135 25.650 27.271 20.002 32.824 4931 37180 39581 54200 7637 20.029 29.985 52.080 32352 36,756 39 404 42.210 5244 48.400 52393 34885 37581 10505 13.672 47.105 50.816 SA 59.196 SA 127.970 37.280 10417 45843 47580 51.660 56110 60965 66.261 72035 109600 143290 42.755 46 672 50-980 55714 $0.925 66 649 72830 79 350 15311 21470 48384 53.739 59.110 65.025 71.673 78.970 07.066 96002 105.00 175.830 205010 55.750 61725 68394 75636 M14 93.06 103740 115270 128130 2100 71590 43440 70749 78969 08212 05605 710.200 123.410 156.170 15470 273550 TO 72053 B0947 01.025 102.400 115 380 130030 145.630 165.400 15660 133350 155.620 181870 212.700 249210 292.110 342.000 402040 1980 105400 2.545.500 241 350 293200 356700 434750 530310 66.440 790050 0467001,181.100 27.300 350.000 767090 1015.700 1542.000 1.779 100 2.360.000 13500 4.165210 5.529 07543.900 3000 130.395.000 2.400.000 1450 500 4994500 7217.700 10.456.000 15.000.000 21013000 31515.000 45.297000 58.000 15976000 50350 19 20 25 30 40 50 Estimated Annual Retirement Living Expenses Estimated annual living expenses if retiring today Number of years until retirement Expected annual rate of return before retirement Future value (use Exhibit 1-A) Projected annual retirement living expenses, adjusted for inflation X (A) Estimated Annual Income at Retirement Social Security income Company pension, personal retirement account income Investment and other income Total retirement income (B) ) (C) Needed investment fund after retirement (A-B) Number of years until retirement Expected annual rate of return before retirement Future value for a series of deposits (use Exhibit 1-B) Annual deposit to achieve needed investment fund (C/D) (D)
