What real amount must you deposit each year to achieve goal

Assignment Help Financial Management
Reference no: EM131063068

You want to have $4 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 13 percent and the inflation rate is 4.5 percent. What real amount must you deposit each year to achieve your goal? (Do not round your intermediate calculations.) rev: 09_18_2012 $14,904.92 $3,945.92 $15,650.16 $15,501.11 $14,159.67

Reference no: EM131063068

Questions Cloud

What inflation rate is expected after year one : Because of a recession, the inflation rate expected for the coming year is only 4%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 4%. Assume that the real risk-free rate is r* = 2% for all maturit..
The cost of capital: weighted average cost of capital : The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these compone..
What is the smallest expected loss over the next year : A stock has an annual return of 12 percent and a standard deviation of 31 percent. What is the smallest expected loss over the next year with a probability of 5 percent?
Moral hazard problem when a firm issues bonds : Consider the example of moral hazard problem when a firm issues bonds/takes loans (in lecture note 9). We have shown that if the a sufficiently large fraction of the project is financed by the firm’s internal funds. Suppose now only 10% of the projec..
What real amount must you deposit each year to achieve goal : You want to have $4 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 13 percent and the inflation rate is 4.5 percent. What real amount must you deposit each year to achieve your goal? (Do no..
Use as initial investment in fixed assets when evaluating : Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 6 years ago for $4 million in anticipation of using it as a warehouse and distribution site, but the company ..
What is your total return from this investment : You purchased 3,000 shares in the New Pacific Growth Fund on January 2, 2010, at an offering price of $63.10 per share. The front-end load for this fund is 5 percent, and the back-end load for redemptions within one year is 1 percent. what is your to..
What is their current yield : Heath Foods's bonds have 12 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 9%. They pay interest annually and have a 9% coupon rate. What is their current yield? Round your answer to two decimal places.
Compute the forecasted costs using percent of sales method : Calgary Doughnuts had sales of $200 million in 2007. Its cost of sales were $160 million. If sales are expected to grow at 10% in 2008, compute the forecasted costs using the percent of sales method.

Reviews

Write a Review

 

Financial Management Questions & Answers

  Financial options and weighted average cost of capital

Determine two to three (2-3) methods of using stocks and options to create a risk-free hedge portfolio. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.

  The dividend yield on the preferred stock

The CCC Venture has issued convertible preferred stock to its venture investors. Each share of preferred stock is convertible into 0.80 share of common stock and pays an annual cash dividend of $0.25. If each share of preferred stock has a market val..

  What did these bonds sell for when they were issued

Seven years ago XYZ International issued some 31-year zero-coupon bonds that were priced with a market's required yield to maturity of 12 percent and a par value of $1,000. What did these bonds sell for when they were issued?

  Concerning preferred stock

Which of the following statements is most CORRECT concerning preferred stock?

  Based on their total risk level

What is the correct ranking for the following stocks, highest to lowest, based on their total risk level? Night Ryder has an average return of 15 percent and a standard deviation of 35 percent. WholeMart has an average return of 13 percent and a stan..

  What rate would you actually be paying here

You are looking at a one-year loan of $15,500. The interest rate is quoted as 8.9 percent plus four points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. Wh..

  Saving for new car

Charles Hess is saving for a new tractor. The cost is $75,000. How much must he invest at a 4% annual interest rate to have $75,000 in six years? Karen is saving for a new car. The car cost 22,000. How much must Karen invest in a savings account that..

  Current and quick ratios

The Nelson Company has $1,155,000 in current assets and $525,000 in current liabilities. Its initial inventory level is $367,500, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term..

  Futures contracts of a specific commodity traded on globex

Assume that on January 27, 2016, using news from any source you instruct your broker to take either a Long or a Short position in two (2) June (or July) futures contracts of a specific commodity traded on GLOBEX. Examples are Corn, Crude Oil, Live ca..

  What is the beta of portfolio whose expected return

What is the beta of a portfolio whose expected return is 10% when the risk-free rate is 3% and the market risk premium is 5%?

  Concerned over who has priority of repayment

Mark purchased a very expensive automobile on credit. Within a week, Mark discovered that a tune-up was necessary, for he was in the habit of driving at an excessive rate of speed. When the car was repaired, the bill was more than $1,000. Mark does n..

  Capital budgeting analysis

The Stanley Stationery Shoppe wishes to acquire The Carlson Card Gallery for $300,000. Stanley expects the merger to provide incremental earnings of about $51,000 a year for 10 years. Ken Stanley has calculated the marginal cost of capital for this i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd