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iren2701 [21]
2 years ago
10

You plan to retire in 19 years. At the point of retirement, you want to be able to withdraw 32,877 at the end of each year forev

er. Assume that you earn a 7.29% rate of return prior to retirement and an 5.02% rate of return after retirement. If you do not want to make any further contributions to your retirement fund, how much do you need today? Round answer to the nearest dollar.
Business
1 answer:
xz_007 [3.2K]2 years ago
3 0

Since no any further contributions will be made to the retirement fund, the amount you need today is $172,014.

<h3>Calculation of Present Value and Present Value of a Perpetuity</h3>

The first step is to calculate the present value (PV) of the contribution at the point of retirement in 19 years using the formula for calculating the present value (PV) of perpetuity as follows:

PV in 19 years = CF / R ............................................. (1)

Where;

PV in 19 years = Present value (PV) of the contribution at the point of retirement in 19 years = ?

CF = Cash flow or yearly expected withdrawal = $32,877

R = Rate of return after retirement = 5.02%, or 0.0502

Substituting the values into equation (1), we have:

PV in 19 years = $32,877 / 0.0502 = $654,920.3187251

The amount you need today can be calculated using the present value formula as follows:

PV = FV / (1 + r)^n ……………………………………………. (2)

Where;

PV = Present value or the amount you need today = ?

FV = Future value or PV in 19 years = $654,920.3187251

r = rate of return prior to retirement = 7.29%, or 0.0729

n = number of years = 19

Substituting the values into equation (2), we have:

PV = $654,920.3187251 / (1 + 0.0729)^19 = $654,920.3187251 / 3.80737505803714 =  $172,013.607470218

Rounding to the nearest dollar, we have:

PV = $172,014

Therefore, the amount you need today is $172,014.

Learn more about present value here: brainly.com/question/17322936.

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If a frozen pizza plant is the cost object, classify each of the following costs as direct or indirect, respectively: property i
emmainna [20.7K]

Answer:

Indirect

Direct

Iindirect

Explanation:

Direct cost is the cost that can be traced back to the cost object whereas the indirect cost cannot be traced back. Cost object is something to which the costs are assigned. in this case the cafeteria workers are directly working with the cost object:Frozen pizza plant, hence the cost is directly associated with that. Janitorial supplies and property insurance cost does not directly relate to The cost object given here so it will be classified as indirect cost.

3 0
3 years ago
A company has issued a floating-rate note with a coupon rate equal to the three-month Libor + 65 basis points. Interest payments
enot [183]

Answer:

2.20%

Explanation:

Data provided:

Company issued floating-rate note with a coupon rate equal to the three-month Libor 65 basis points

On 31 March three-month Libor  = 1.55%

On 30 June three-month Libor  = 1.35%

Now,

The coupon rate for the interest payment made on 30 June will be calculated as

= 1.55% + 0.65

= 2.20%

Hence, the correct option is 2.20%

6 0
3 years ago
Identify her/his entrepreneurial qualities and support your answer based on what you observed
Masja [62]

The main qualities of real entrepreneur are:

1) spiritual freedom and energy;

2) willpower;

3) ability to effectively negotiate and convince partners and customers;

4) organizational skills;

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5 0
3 years ago
How are you doing today??
babunello [35]
Good how are you doing
5 0
3 years ago
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f a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars
IRISSAK [1]

Answer:

correct option is c. 5 utility units

Explanation:

given data

receives 20 units = consuming 2 candy

receives 25 units = consuming 3 candy

to find out

Marginal utility

solution

we know that Marginal utility of 3rd candy bar is express as  

Marginal utility = \frac{change in total utility}{change in quantity}    .........1

put here value

Marginal utility = \frac{25 - 20}{3 - 2}

Marginal utility =  5 unit

so correct option is c. 5 utility units

7 0
3 years ago
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