You are 25 years old and have just finished your degree work for 50 years and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are 25 years old and have just finished your degree work for 50 years and each month save a constant amount towards your retirement. You plan to You estimate that by the time you retire the life expectancy will be 100 years, but since you eat healthy, run half a marathon each month and have never touched alcohol or drugs you assume that you will live to be 105. The interest rate is 0.5% per month. Your calculations show that you will need $50,000 per annum in each of your 30 years of retirement. a) How much do you need to save each month to finance your retirement? b) Suppose that just as you are about to start working you find out that there is a medical breakthrough that can cure all viruses. You now assume that you are likely to live until 110. How much do you need to save each month? c) Now assume that you decided to spend the first two years following university backpacking, another two years volunteering in Africa and a year lounging around in Amsterdam. That is, you will start working only at the age of 30. Also assume that your plans for the next five years will not affect your life expectancy (that will still be 105) or the age of retirement (75). Recalculate how much money you need to save each month. d) Now assume that your savings will increase each month at a constant rate of 0.1% (you still work for 50 years and live to be a 105). How much money will you need to save in the first month? Note, that for full marks you will need to solve it analytically and more marks will be given to simple solutions. You are 25 years old and have just finished your degree work for 50 years and each month save a constant amount towards your retirement. You plan to You estimate that by the time you retire the life expectancy will be 100 years, but since you eat healthy, run half a marathon each month and have never touched alcohol or drugs you assume that you will live to be 105. The interest rate is 0.5% per month. Your calculations show that you will need $50,000 per annum in each of your 30 years of retirement. a) How much do you need to save each month to finance your retirement? b) Suppose that just as you are about to start working you find out that there is a medical breakthrough that can cure all viruses. You now assume that you are likely to live until 110. How much do you need to save each month? c) Now assume that you decided to spend the first two years following university backpacking, another two years volunteering in Africa and a year lounging around in Amsterdam. That is, you will start working only at the age of 30. Also assume that your plans for the next five years will not affect your life expectancy (that will still be 105) or the age of retirement (75). Recalculate how much money you need to save each month. d) Now assume that your savings will increase each month at a constant rate of 0.1% (you still work for 50 years and live to be a 105). How much money will you need to save in the first month? Note, that for full marks you will need to solve it analytically and more marks will be given to simple solutions.
Expert Answer:
Answer rating: 100% (QA)
SOLUTION a To determine how much you need to save each month to finance your retirement we can use t... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
1. Suppose your personal federal income tax rate is 30%. You are trying to decide which of the following bonds to invest in. Both are BBB rated and therefore equally risky. State of Illinois Bond...
-
You are 25 years old and decide to start saving for your retirement. You plan to save $5000 at the end of each year (so the first deposit will be one year from now), and will make the last deposit...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
a. Find the nth-order Taylor polynomials for the given function centered at the given point a, for n = 0, 1, and 2.b. Graph the Taylor polynomials and the function. f(x) = ln x, a e =
-
Draw Fischer projections for the two i aldoheptoses whose stereochemistry at C3, C4, C5, and C6 is the same as that of 1)-glucose at C2, C3, C4, and C5.
-
A two degree-of-freedom model of a machine tool is illustrated in Figure P6.8. Using \(x_{1}\) and \(x_{2}\) as generalized coordinates, derive the differential equations governing the motion of the...
-
What are the three steps that can be taken along a corporate eco-efficiency path? How are the five modules related to development of a measure of eco-efficiency?
-
You are auditing the financial statements of a cosmetics distributor that sells thousands of individual items. The distributor keeps its inventory in its distribution center and in two public...
-
Robert was working away at his first attempt at variance analysis for his manufacturing company. He filled in variable-and fixed-MOH costs where he saw fit, before actually calculating the related...
-
Kelly Consulting Post-Closing Trial Balance April 30, 20Y8 Account number Debit Credit Money 11 22,100 accounts receivable 12 3,400 supplies 14 1,350 prepaid rent 15 3,200 prepaid insurance sixteen...
-
An aircraft wing is idealized as a cantilever beam of constant width and length 'I' with a tip mass of weight 'W' (N) and has a uniformly distributed loading of 'q.' (N/m) as shown in the figure...
-
A woman takes her dog Rover for a walk on a leash. To get the little pooch moving forward, she pulls on the leash with a force of 24.0 N at an angle of 38.0 above the horizontal. For related...
-
ZeroLeverage Co. is a manufacturing company. It is expected to earn $500,000 EBIT next year, and the EBIT will grow at a constant rate of 2% forever. It always distributes all its net earnings as...
-
How do advanced cross-cultural psychology frameworks shed light on the nuanced manifestations of role conflict in culturally diverse work environments, and what culturally sensitive interventions can...
-
Current Designs faces a number of important decisions that require incremental analysis. Current Designs is always working to identify ways to increase efficiency while becoming more environmentally...
-
Explain 'benchmarking' in relation to quality standards. What are the benefits of consultation with stakeholders? Define good practice standards. Give examples of the rights of clients. Give an...
-
Do you think that most people would want to live to be 120 years of age, or even older? Give three arguments in favor of living to such an age, and then give three arguments against such longevity.
-
You are a U.S. investor who purchased British securities for 2,000 one year ago when the British pound cost U.S. $1.50. What is your total return (based on U.S. dollars) if the value of the...
-
Use the incremental IRR rule to correctly choose between the investments in Problem 21 when the cost of capital is 7%. At what cost of capital would your decision change?
-
You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. You anticipate that the plant will take a year to build and cost $100...
-
Your R&D division has just synthesized a material that will superconduct electricity at room temperature; you have given the go-ahead to try to produce this material commercially. It will take five...
-
The \(T d S\) equation \(T d S=C_{P} d T-T\left(\frac{\partial V}{\partial T} ight)_{P} d P\) is valid where entropy is a function of (a) \(T\) and \(P\) (b) \(P\) and \(V\) (c) \(T\) and \(V\) (d)...
-
The inversion temperature of hydrogen is (a) \(315 \mathrm{~K}\) (b) \(202 \mathrm{~K}\) (c) \(275 \mathrm{~K}\) (d) \(345 \mathrm{~K}\).
-
The inversion temperature of helium is (a) \(460 \mathrm{~K}\) (b) \(40 \mathrm{~K}\) (c) \(620 \mathrm{~K}\) (d) \(823 \mathrm{~K}\).
Study smarter with the SolutionInn App