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valkas [14]
2 years ago
15

This is a classic retirement problem. A time line will help in solving it. Your friend is celebrating her 35th birthday today an

d wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $125,000 from her savings account on each birthday for 20 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 7 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund.
a. If she starts making these deposits on her 36th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), she must deposit $______ annually to be able to make the desired withdrawals at retirement.
b. Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump sum payment on her 35th birthday to cover her retirement needs. This deposit will have to be in the amount of $_____ .
c. Suppose your friend's employer will contribute $3500 to the account every year as part of the company's profit-sharing plan. In addition, your friend expects a $175,000 distribution from a family trust fund on her 55th birthday, which she will also put into the retirement account. She must deposit $_________ annually now to be able to make the desired withdrawals at retirement.
Business
1 answer:
xeze [42]2 years ago
7 0

Answer:

a. $21,725.65

b. $19,385

c. 27,421.32

Explanation:

Savings = 125,000

Annuity Formula :

(\frac{1}{1.07})^{30} [  \frac{125,000}{0.07} ( 1 - \frac{1}{1.07 ^}^{20} ) ] = \frac{A}{0.07} ( 1 - \frac{1}{0.07 ^ } ^{30} )

Solving the equation we get,

A  = $21,725.65

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On December 1, Year 3 Walton Company paid $3,600 cash for office space to be used during the coming year. This event is_________
Alex787 [66]

Answer:

christmas party

Explanation:

3 0
3 years ago
S&L Computer services has separate divisions to focus on the needs of individual consumers, small businesses, and large busi
prisoha [69]

Answer:

Letter c is correct. <u>Customer.</u>

Explanation:

Departmentalization by customer is a type<u> of grouping that divides organizational activities so that they are effective in meeting and directing organizational strategies to a type of audience that has similar characteristics</u>, such as age, gender, preferences, and income. Each unit has customized characteristics and sales method so that the customer group has a positive perception about the organization and its requirements and needs are properly met.

3 0
2 years ago
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
xz_007 [3.2K]

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.

3 0
2 years ago
A bond with a $1,000 face value and an 8 percent annual coupon pays interest semiannually. The bond will mature in 15 years. The
Keith_Richards [23]

Answer:

$781.99

Explanation:

The price of the bond can be computed using excel pv function given below:

=-pv(rate,nper,pmt,fv)

rate is the semiannual yield to maturity i.e11%*6/12=5.5%

nper is the number of semiannual coupons the bond would i.e 30 semiannual coupons in 15 years

pmt is the amount of semiannual coupon=$1000*8%*6/12=$40

fv is the face value of $1000

=-pv(5.5%,30,40,1000)=$781.99  

7 0
3 years ago
In the job performance formula Performance=M+A+E, what does M stand for?
Illusion [34]

<u>Answer: </u>Motivation

<u>Explanation:</u>

In the job performance formula M stands for motivation, A for Ability and skills E for Environmental obstacles. When the company's performance is stable over time because of the employee's performance then the employee's will be rewarded with huge incentives.

This model where Performance=M+A+E it denotes that the compensation benefits does not change the employee behavior towards his performance . Only these three factors determine his performance behavior. When these three factors are not met in enough then it reflects in inefficient performance of the employee.

8 0
3 years ago
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