Question
You are now 50 years old and plan to retire at age 65. You currently have a stock portfolio worth $105,800, a 401(k) retirement plan
You are now 50 years old and plan to retire at age 65. You currently have a stock portfolio worth $105,800, a 401(k) retirement plan worth $204,600, and a money market account worth $54,000. Your stock portfolio is expected to provide annual returns of 11 percent, your 401(k) investment will earn 10.29 percent annually, and the money market account earns 8.96 percent, compounded monthly. a)If you do not save another penny, what will be the total value of your investments when you retire at age 65? (Round factor values to 4 decimal places, e.g. 1.5212 and final answer to final answer to 2 decimal places, e.g. 15.25.) b)Assume you plan to invest $12,000 every year in your 401(k) plan for the next 15 years (starting one year from now). How much will your investments be worth when you retire at age 65? (Round factor values to 4 decimal places, e.g. 1.5212 and final answer to 2 decimal places, e.g. 15.25.) c)You want your current investments, which are described in the problem statement, to support a perpetuity that starts a year from now (at age 66). How much can you withdraw each year without touching your principal? (Round answer to 2 decimal places, e.g. 15.25.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started