Reference no: EM132000265
You have to set up your own retirement fund and aim to invest in a diversified portfolio of stocks of your choosing. In order to reduce the transaction costs of your investing you have estimated that you need to have a minimum of $100,000 to invest into your portfolio in 5 years. To achieve this target you aim to save the money from your pay, which you will deposit, in equal monthly instalments, in a medium-term cash account offering a nominal rate of 3% per annum compounded monthly.
a) Calculate how much you need to invest on a monthly basis in order to have the $100,000 available to invest in five (5) years. Accruing this amount of money is the 1st step in your plans for retirement, however, this amount is only a stepping stone as you realise that this will be insufficient for your retirement in 35 years. Given that you are aiming to invest in a diversified manner, you expect that you will achieve a rate of return similar to the market portfolio. You estimate that you can achieve a rate of return on your portfolio of 7% per annum, compounded monthly.
Note: You will not be investing more money, from your wages, into your portfolio as you are confident of your ability to generate returns and you wish to invest the money into other assets. As indicated, you expect that you will have a working life of 35 years from today, after which you expect you will need a need a minimum of $6,000 per month to live comfortably, in retirement, for a following 25 years. For simplicity, assume that the $6,000 per month payment will be made at the end of the month. Hint: Use a basic timeline to detail the cash flows.
b) Identify, using applicable calculations, whether you will have enough money (in the form of your portfolio investment) to support your $6,000 per month retirement allowance.
|
Define multicultural approaches
: Identify the approaches-systems, multicultural, or a combination of both-you would use for each case study.
|
|
Calculate the income tax payable
: On July 1, 2013, MC leased an unused part of its building to Raquin Ltd. on a two-year lease. Calculate the income tax payable
|
|
Cannot get the npv to come out
: NPV= 110,800/(1+0.09)^2 and all the up to the 4th year. Cannot get the NPV to come out. Have not worked on the 2nd part yet.
|
|
Finding the nominal yield to maturity on the bond
: Michael Inc. has a $1,000 par value bond that is currently selling for $1,300. It has an annual coupon rate of 7%, paid semiannually.
|
|
Invest in diversified portfolio of stocks
: You have to set up your own retirement fund and aim to invest in a diversified portfolio of stocks of your choosing.
|
|
Compute the expected rate of return on ffc stock
: Dividends are expected to grow at a constant rate of 4.5% indefinitely. Compute the expected rate of return on FFC stock.
|
|
Are subcultures in police work inevitable
: Are subcultures in police work inevitable? Explain. What steps might you take, as a police administrator, to prevent this from occurring?
|
|
Calculate the best-case and worst-case npv figures
: Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent.
|
|
Generate cash flow from operations
: Michaels, Inc., purchased a machine for $75,000. The machine has a useful life of five years and no salvage value. Straight-line depreciation is to be used.
|