How much should he invest each year

Assignment Help Accounting Basics
Reference no: EM132732413

Problem - Retirement Planning - A recent MBA would like your assistance in determining how much to save for retirement. He is planning to invest $3,000 in a tax-sheltered retirement fund at the end of each year (i.e., appreciation of the fund is not taxed). The rate of return each year can be modeled as a normally distributed random variable with a mean of 12 percent and a standard deviation of 2 percent.

a. If he is 30 years old now, how much money should he expect to have in his retirement fund at age 60?

b. What is the probability that he will have more than $1 million in his retirement fund when he reaches age 60?

c. How much should he invest each year if he wants the mean value of his portfolio to be at least $1 million at age 60?

d. How much should he invest each year if he wants there to be a 90 percent chance of having at least $1 million in his retirement fund at age 60?

Reference no: EM132732413

Questions Cloud

What the us policy should be in terms of immigration : What do you believe the U.S. policy should be in terms of immigration and security? How would you implement this policy? Explain your rationale.
What is the molarity of the stock solution : 22.0 mL of stock solution is used to produce a .458 M solution after dilution with 50.0 mL of water. What is the molarity of the stock solution?
What should the mass of a pb-208 atom be : A Pb-208 atom contains 82 protons, 82 electrons, and 126 neutrons. The mass of a proton is 1.0073 u, an electron is 0.00055 u, and a neutron is 1.0087 u.
What is the concentration of zn2 : What is the concentration of Zn2+ in the unknown?
How much should he invest each year : How much should he invest each year if he wants there to be a 90 percent chance of having at least $1 million in his retirement fund at age 60
What is the molarity of the stock solution : 22.0 mL of stock solution is used to produce a .458 M solution after dilution with 50.0 mL of water. What is the molarity of the stock solution?
Calculate the expected costs : The fixed portions of these costs are $300 and $200, respectively. Calculate the expected costs when production is 5,000 units
What is the molarity of a solution prepared by diluting : What is the molarity of a solution prepared by diluting 40.0mL of 3.55 M KCI solution to a final volume of 200 mL?
What should you investigate before making a decision : What should you investigate before making a decision about the correcting entry? What is happening to the Cash account

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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