Question
Suppose your retirement account pays 9% APR compounded monthly. a. What size nest egg do we need in order to retire with a 25 year
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Suppose your retirement account pays 9% APR compounded monthly.
a. What size nest egg do we need in order to retire with a 25 year annuity that yields $500 per month? - b What size nest egg do we need in order to retire with a 25 year annuity that yields $700 per month?
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You estimate you can save $150 per month for a down payment on a car. You hope to purchase the car in 24 months. You invest this in an account that pays 6% compounded monthly.
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How much will you have in the account at the end of 24 months?
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How much more would you have at the end of 24 months if you deposited $200 per month?
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What would you need to deposit each month to have $8,000 available for a down payment?
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You estimate you can save $150 per month for a down payment on a car. You hope to purchase the car in 24 months. You invest this in an account that pays 6% compounded monthly.
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A. How much will you have in the account at the end of 24 months?
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B. How much more would you have at the end of 24 months if you deposited $200 per month?
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C. What would you need to deposit each month to have $8,000 available for a down payment?
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You really want to retire a millionaire. You would like to retire at age 65 and have $1,000,000 saved at that time. You are 21 years old now and you find an account that pays 8% compounded monthly in which you can make monthly payments.
A. What should your monthly payment be in order to have this $1,000,000 by the time you are 65? - B. What is the total amount you paid into this account over the years?
- C. Compare this with a lump sum deposit. In other words, what is the present value of $1,000,000 at an APR of 8% compounded monthly? (No monthly deposits, only a one time deposit at age 21 that will be worth $1,000,000 at age 65.)
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