Retirement planningPersonal Finance ProblemHal Thomas, a

3535-year-old

college graduate, wishes to retire at age

6565.

To supplement other sources of retirement income, he can deposit

$2 comma 2002,200

each year into a tax-deferred individual retirement arrangement (IRA). The IRA will earn a return of

1111%

over the next

3030

years.a.If Hal makes annual end-of-year

$2 comma 2002,200

deposits into the IRA, how much will he have accumulated by the end of his

65 th65th

year?b.If Hal decides to wait until age

4545

to begin making annual end-of-year

$2 comma 2002,200

deposits into the IRA, how much will he have accumulated by the end of his

65 th65th

year?c.Using your findings in parts a and b, discuss the impact of delaying making deposits into the IRA for 10 years (age

3535

to age

4545)

on the amount accumulated by the end of Hal's

65 th65th

year.d.Rework parts a and b assuming that Hal makes all deposits at the beginning, rather than the end, of each year. Discuss the effect of beginning-of-year deposits on the future value accumulated by the end of Hal's

65 th65th

year.

a.If Hal makes annual end-of-year

$2 comma 2002,200

deposits into the IRA, the amount he will have accumulated by the end of his

65 th65th

year is

$nothing.

(Round to the nearest cent.)b.If Hal decides to wait until age

4545

to begin making annual end-of-year

$2 comma 2002,200

deposits into the IRA, the amount he will have accumulated by the end of his

65 th65th

year is

$nothing.

(Round to the nearest cent.)c.Using your findings in parts a and b, which of the following options better describes the impact of delaying making deposits into the IRA for 10 years (age

3535

to age

4545)

on the amount accumulated by the end of Hal's

65 th65th

year? (Select the best answer below.)By delaying the deposits by 10 years, Hal is incurring a significant opportunity cost. This cost is due to both the lost deposits of

$22 comma 00022,000

($2 comma 2002,200times10

yrs.) and the lost compounding of interest on all of the money for 10 years. By delaying the deposits by 10 years, Hal earns a large capital gain. This gain is due to both the saved deposits of

$22 comma 00022,000

($2 comma 2002,200times10

yrs.) and the gained compounding of interest on all of the money not deposited for 10 years. d.If Hal makes annual beginning-of-year

$2 comma 2002,200

deposits into the IRA, the amount he will have accumulated by the end of his

65 th65th

year is

$nothing.

(Round to the nearest cent.)If Hal decides to wait until age

4545

to begin making annual beginning-of-year

$2 comma 2002,200

deposits into the IRA, the amount he will have accumulated by the end of his

65 th65th

year is

$nothing.

(Round to the nearest cent.)Both deposits

increased

decreased

due to the extra year of compounding from the beginning-of-year deposits instead of the end-of-year deposits. The incremental change in the

annuity is much larger than the incremental compounding on the

30 dash year30-year

20 dash year20-year

deposit due to the larger sum on which the last year of compounding occurs.(Select from the drop-down menus.)

Retirement planning Personal Finance Problem Hal Thomas, a 35-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,200 each year into a tax-deferred individual retirement arrangement (IRA) The IRA will earn a return of 11% over the next 30 years. a. If Hal makes annual end-of-year $2,200 deposits into the IRA, how much will he have accumulated by the end of his 65th year? b. If Hal decides to wait until age 45 to begin making annual end-of-year $2,200 deposits into the IRA, how much will he have accumulated by the end of his 65th year? c. Using your findings in parts a and b, discuss the impact of delaying making deposits into the IRA for 10 years (age 35 to age 45) on the amount accumulated by the end of Hal's 65th year d. Rework parts a and b assuming that Hal makes all deposits at the beginning, rather than the end, of each year. Discuss the effect of beginning-of-year deposits on the future value accumulated by the end of Hal's 65th year a. If Hal makes annual end-of-year $2,200 deposits into the IRA, the amount he will have accumulated by the end of his 65th year is (Round to the nearest cent.) b. i Hal decides to walt unli ge 45 to begin akg nual endo ear $2,200 depoal ito the IRA, he amount hccatd by tho an of his e5thrRounto the neartcn) c. Using your findings in parts a and b, which of the following options better describes the impact of delaying making deposits into the IRA for 10 years (age 35 to age 45) on the amount accumulated by the end of Hal's 65th year? (Select the best answer below.) 10 years. O By delaying the deposits by 10 years, Hal eams a large capital gain. This gain is due to both the saved deposits of $22,000 (S2,200 x 10 yrs.) and the gained compounding of interest on all of the money not deposited for 10 years. d. If Hal makes annual beginning-of-year $2.200 deposits into the IRA, the amount he will have accumulated by the end of his 65th year is $Round to the nearest cent.) Hal decdes to wait unl 4tobgin making annual begjining-of year $2,200 daposts ito he IRA,the amount he wil hae scumulat tay the and of his 6thtRoundtthe nearest cent) due to the extra year of compounding from the beginning-of-year deposits instead of the end-of-year deposits. The incremental change in thennuity is much larger than the incremental compounding 'I annuity is much larger than the incremental compounding on Both deposits the deposit due to the larger sum on which the last year of compounding occurs. Select from the drop-down menus