Time Value of Money Future Value Cash Flow Blackboard

You are wanting to retire as a millionaire by the time you are $50.$ You are starting with nothing, but believe you could get an average return of $9\%$ over the next $25$ years.

How much would you need to save monthly to get a million dollars by age $50?$

You made it$!$ Your $50$ years old and have a million dollars. You decide to retire and live off $$70,000$ a year. You have gotten conservative now that you are retired and can only get $5\%$ return on your money? You plan to take annual distributions. How long will your money last to the nearest decimal $($ex $11\mathrm{.}1)?$

Lee wishes to accumulate $$1$ million by making equal annual end$-$of$-$year deposits over the next $20$ years. If he can earn $10$ percent on his investments, how much must he deposit at the end of each year?

$$14,900$

$$50,000$

$$117,453$

$$17,460$

Suppose your Professor currently has no savings, but wants to retire in $30$ years as a millionaire. If he can earn $8\mathrm{.}75\%,$ compounded annually on his investments, how much should he set aside in equal installments today to reach his goal? $[$Beg$]$

$$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Suppose you were going to save $$1,000$ per year for three years at a $10\%$ interest rate compounded annually, with the first investment occurring today. What would be the future value of this investment?

$$3,124$

$$3,310$

$$3,641$

$$4,812$

If you deposit $$16,000$ per year for $12$ years $($each deposit is made at the end of each year$)$ in an account that pays an annual interest rate of $14\%,$ what will your account be worth at the end of $12$ years?

You are told that if you invest $$11,000$ per year for $23$ years $($all payments made at the end of each year$)$ you will have accumulated $$366,000$ at the end of the period. What annual rate of return is the investment offering?

If you deposit $$15,000$ per year for $9$ years $($each deposit is made at the beginning of each year$)$ in an account that pays an annual interest rate of $8\%,$ what will your account be worth at the end of $9$ years?

You plan to accumulate $$450,000$ over a period of $12$ years by making equal annual deposits in an account that pays an annual interest rate of $9\%($assume all payments will occur at the beginning of each year$).$ What amount must you deposit each year to reach your goal?

$$20,497\mathrm{.}98$

You are told that if you invest $$11,100$ per year for $19$ years $($all payments made at the beginning of each year$)$ you will have accumulated $$375,000$ at the end of the period. What annual rate of return is the investment offering?

$5\mathrm{.}48\%$

How much will a investment of $$650$ per month be worth in eight years at an annual interest rate of $8$ percent?

$$87,015$

$$87,595$

$$86,498$

$$87,758$

The Garrett$$s are planning ahead for their son's education. He's eight now and will start college in $10$ years. How much will they have to set aside at the end of each year to have $$65,000$ in $10$ years if the annual interest rate is $7\%?$

$$4,705$

$$4,500$

$$3,976$

$$4,625$

You just invested $$50,000$ into an account that earns $7$ percent compounded annually. At the end of each year you can withdraw $$4,971.$ How many years can you continue to make the withdrawals?

$18$ years

If the future value of annuity A is greater than the future value of annuity B$,$ then the present value of annuity A must also be greater than the present value of annuity B$.$

TRUE

FALSE

The present value of an annuity increases as the discount rate increases.

TRUE

FALSE

You would like to retire in $30$ years by investing in your $401($k$)$ plan at work. You make $$50,000.$ Your employer will match dollar for dollar up to $5\%,$ so you elect to contribute $5\%$ of your salary to your $401($k$).$ You will make monthly contributions to your $401($k$).$

After reviewing the $401($k$)$ investment choices, you expect to get a $9\mathrm{.}5\%$ return.

Assuming you get no increases in salary in $30$ years, how much will you have in your $401($k$)$ in $30$ years?

$$952,211$

$$847,097$

$$926,543$

$$828,982$

You plan to borrow $$389,000$ now and repay it in $25$ equal annual installments $($payments will be made at the end of each year$).$ If the annual interest rate is $14\%,$ how much will your annual payments be$?$

It is January $1$st and Steve Hein has just established an IRA $($Individual Retirement Account$).$ Steve will deposit $$2,000$ a year at the end of year for the following $39$ years $(40$ years total$).$ How much money will Steve have in his account at the end of the $40$th year? Assume that the account pays $12\%$ interest compounded annually.

$$1,087,197$

$$1,219,661$

$$1,534,183$

$$1,368,020$