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Jon, 20, is about to begin his career as a rocket scientist for a NASA contractor. Having recently read an article on Social Security in the Wall Street Journal he is concerned that the Social Security Trust Fund will be exhausted by 2032 and decides he should not rely on Social Security to fund his retirement. His retirement plan pays 9 percent annual interest and allows him to make equal yearly contributions. Jon plans to retire at the age of 65 and will withdraw the entire amount of his retirement account at that time. He would like to purchase a houseboat to live in. The boat currently sells for $287,500. Annual inflation for luxury yachts is expected to be 1 percent. Jon plans to purchase the boat and place the remaining amount into an account paying 6% interest from which he will withdraw a yearly income of $150,000 per year. Based on family history, Jon expects to live until the age of 90. Assume Jon will make his first contribution one year from today and his last on the day he retires.
10. How much will Jon need at retirement to pay for the houseboat and to provide his desired yearly income of $150,000/year? Round to the nearest whole dollar.
11. How much will Jon need to contribute each year to his retirement fund to reach his goals? Round to the nearest whole dollar.
Noor Patel has had a busy year! She decided to take a cross-country adventure. Along the way, she won a new car on the “Price Is Right” (valued at $14,200) and won $400 on a scratch-off lottery ticket (the first time she ever played). How much will s..
If the risk-free rate is 5.2 percent, what should the share price be in one year?
Stock A has a daily volatility of 1.2% and stock B has a daily volatility of 1.8%. The correlation between the two stock price returns is 0.2. What is the standard deviation of the return from A over 4 days?
Corporate restructuring has been one result of more institutional ownership. Restructuring can cause
Which of the following items will lead to a rise in net working capital?
Why do pension funds have vesting periods? Do vesting periods have any advantages to employees relative to a system where new hires are eligible to participate in a pension plan right away?
Profit from Covered Interest Arbitrage. Today, the one-year U.S. interest rate is 4%, while the one-year interest rate in Argentina is 17%. The spot rate of the Argentine peso (AP) is $.44. The one-year forward rate of the AP exhibits a 14% discount...
Secolo Corporation stock currently sells for $75 per share. The market requires a return of 8.8 percent on the firm’s stock. If the company maintains a constant 2.4 percent growth rate in dividends, what was the most recent dividend per share paid on..
A stock has had returns of 13 percent, 31 percent, 18 percent, −19 percent, 31 percent, and −7 percent over the last six years. What are the arithmetic and geometric returns for the stock?
Suppose Turnbull is currently distributing 65.00% if its earnings in the form of cash dividends. It has also historically generated an average return on equity (ROE) of 18%. Turnbull's Estimated growth rate is ......
The real risk-free rate is 1.74%. Inflation is expected to be 3.96% this year and 2.23% next year. The maturity risk premium is estimated to be equal to 0.08%(t-1), where t equals the maturity of a bond in years. All treasuries are assumed to have no..
Calcuate the net profit or loss from BUYING a PUT option on Taz if at the time of expiration the price per share of Taz is $54.00.
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