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Jared is looking forward to graduating with his MBA from OSU. He wants to begin saving for retirement and believes he will need $135,000 during his first year in retirement (he assumes a 2% annual inflation rate, so the $135,000 will have about the same purchasing power as $75,000 today). Jared wants to maintain a constant standard of living as a retiree, so his withdrawals will grow at 2% annually, after the first withdrawal of $135,000, to keep pace with inflation. He assumes that he will work and save for 30 years before retirement and earn 8% annual interest on his savings. Further he assumes that he will live for 20 years after retiring and that he will put his savings in CDs earning 3% interest annually. Jared will make annual deposits into his retirement account at the end of each year. However, he will make annual withdrawals during retirement, with each withdrawal occurring at the beginning of the year (note: Jared’s first withdrawal from his retirement account occurs on the same day he makes his last savings deposit). Ignoring taxes, fees, etc., how much will Jared need to save annually to fund his retirement? (i.e. How much will he have to save each year after he graduates to fund his retirement if he wants to withdrawal $135,000 in 30 years?)
Gabbys garage issued a bond with a 10-year maturity, a $1,000 par value, a 10 percent coupon rate, and semi-annual interest payments. Two years after the bond was issued, the going rate of interest on similar-risk bonds fell to 6 percent. Suppose the..
What break-even resale price in three years will make you indifferent between buying and leasing?
YIELD TO MATURITY A firm's bonds have a maturity of 9 years with a $1,000 face value, have an 7% semiannual coupon, are callable in 5 years at $1,200, and currently sell at a price of $1,150. What are their nominal yield to maturity?
Keith and Dena Diem have personal property coverage with a $250 limit on rency, a $1,000 limit on jewelry, and a $2,500 limit on gold, silver, and pewter The do not have a personal property floater. If $500 in cash, $2,400 of jewelry, and $1,5 of pew..
Assume the pre-tax profit of $50,000 has been earned by a business, and the owner/proprietor wants to withdraw all of the after-tax profit for personal use. Assume the tax rate for a C corporation is 34%, while the rate for a person is 27%. The aft..
The bonds mature in 11 years and carry a 9 percent annual coupon. What is the firm's aftertax cost of debt if the applicable tax rate is 35 percent?
Kendall Company has sales of 1,500 units at $60 a unit. Variable expenses are 30% of the selling price. If total fixed expenses are $53,000, the degree of operating leverage is:
Which of the following actions are most likely to directly increase cash as shown on a a firm's balance sheet?
Kennedy Air Services is now in the final year of a project. The equipment originally cost $34 million, of which 80% has been depreciated. Kennedy can sell the used equipment today for $8.5 million, and its tax rate is 35%. What is the equipment's aft..
A firm plans to split its stock 2-for-1. Which of the following most likely will NOT occur?
A venture has raised $4,000 of debt and $6,000 of equity to finance its firm. Its cost of borrowing is 6%, its tax rate is 40%, and its cost of equity capital is 8%. What is the venture's weighted average cost of capital?
A stock, currently trading at $50 expects to pay a $4.50 dividend this year. The dividends and stock price has been growing at 8 per cent for 10 years. What is the expected total return on the stock this year? and how to use calculator?
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