### Explain after-tax rate of return on assets before retirement

Assignment Help Financial Management
##### Reference no: EM13215245

Tara, age 44, plans to retire at age 67. Her life expectancy, accounting for family medical history, is age 97. Tara is single and currently earns \$56,000 per year as a university librarian. At her normal retirement age she expects to receive \$28,700 in Social Security benefits (today's dollars). She will also receive a small defined benefit pension in the amount of \$13,500 from a local municipality. She has come to you to determine whether she is on track to meet her retirement goals. Use the following assumptions and information to answer the questions that follow:

• She would like to use a 90% income replacement ratio, based on current earnings.

• She is currently contributing \$2,400 per year into a 403(b) plan [no employer match].

• Inflation is assumed to be 3.50%.

• She can earn a 6.50% after-tax rate of return on assets before retirement.

• She can earn a 4.50% after-tax rate of return on assets after retirement.

a. How much does Tara need, on her first day of retirement, to fund a capital depletion model of retirement?

b. Given her current level of savings, is Tara on target to reach her retirement goal?

c. If she has a shortfall, how much more must she save per year to reach her goal?

d. If she would like to obtain a capital preservation goal for retirement, how much will she need to have saved on her first day of retirement?

e. Given a capital preservation goal, is she saving enough on a yearly basis currently?

f. How much, in total, must she save yearly to reach a capital preservation model of retirement?

#### Questions Cloud

 Calculate the process capability ratio : Calculate the process capability ratio and the process capability index values, what conclusions is management likely to draw from the capability analysis Explain what is the amount of the average daily float : On average, it takes two days for the funds from these checks to be added to the firm's available balance at the bank once they have been deposited. What is the amount of the average daily float? Examine and analyze the principles of inheritance : Examine and analyze the principles of inheritance. Use the Library to get started on finding resources. Suggest a change to the closest-pair algorithm : Suggest a change to the closest-pair algorithm that avoids presorting the Y array but leaves the running time as O(n lg n). (Hint: Merge sorted arrays YL and YR to form the sorted array Y .) Explain after-tax rate of return on assets before retirement : Tara, age 44, plans to retire at age 67. Her life expectancy, accounting for family medical history, is age 97. Tara is single and currently earns \$56,000 per year as a university librarian. Evaluate the technology, connectivity : Your company has assigned you the task of evaluating its computer networks. You are to write a memo covering 15 points on which you will evaluate the technology, connectivity, and functioning of the company's computer networks. Discuss the costs and support considerations of the web : Based on your research, write a 6-8 page paper that researches the use, adoption, and implementations of two different Web server technologies. The paper should also discuss the costs and support considerations of the Web server applications. Change tactics-change policy and change strategy : How did airplanes change the face of warefare, change tactics, change policy, and change strategy? Order to maximize expected revenue : The discount fare price is \$200 and the estimated "denied boarding" cost is \$500. How many seats should the airline sell for this flight in order to maximize expected revenue?

### Write a Review

#### Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

#### Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

#### Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

#### Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

#### Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

#### Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

#### Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

#### Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

#### Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

#### Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

#### Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.