Saving toward building up retirement fund

Assignment Help Financial Management
Reference no: EM13872644

On her 25th birthday, a young woman engineer decides to start saving toward building up a retirement fund that pays 6% interest compounded monthly(the market interest rate). She feels that $1000000 worth of purchasing power in today's dollars will be adequate to see her through her sunset years after her 65th birthday. Assume a general inflation rate of 4% per year.

 

If she plans to save by making 480 equal monthly deposits, what should be the amount of her monthly deposit in actual dollars? Assume the first deposit is made at the end of first month.

Reference no: EM13872644

Questions Cloud

Which the omb distributes amounts appropriated : Type of fund used to account for commercial- type operations of federal agencies Action by which the OMB distributes amounts appropriated by Congress
How do wireless phone makers attempt to differentiate : How do wireless phone makers attempt to differentiate their handset offerings?
What types of advertising and media are being proposed : What types of advertising and media are being proposed? What type of copy thrust is recommended? Why? What sales promotion activities are being planned
Which funds are used by federal agencies to account : Which funds are used by federal agencies to account for receipts of resources from specific sources, earmarked by law for special purposes?
Saving toward building up retirement fund : On her 25th birthday, a young woman engineer decides to start saving toward building up a retirement fund that pays 6% interest compounded monthly(the market interest rate). She feels that $1000000 worth of purchasing power in today's dollars will be..
What view of the body problem do you think is exhibited : What view of the mind/body problem do you think is exhibited by Picard? Hasker: Epiphenomenalism, and Materialism Star TreK Next Generation , Episode: The Measure of a Man
What is the magnitude and direction of spending : What is the magnitude and direction of spending
What would you consider an authoritative source : What would you consider an authoritative source? If you are shown an article without being told the name of the author or the journal, how you will be able to judge the quality of the article
Cornett company, a tennis racket manufacturing company : Prepare the journal entry for Cornett to record the receipt of the land.

Reviews

Write a Review

Financial Management Questions & Answers

  Computed the weighted cost of capital

Macintosh computers can purchase a piece of equipment that is suspected to yield an 11% return in 10 be financed at 6% with debt. Later in the year the Company said no to the opportunity to purchase a newer machines that would yield a 9% return or co..

  The friendly national bank holds 50 million in reserves at

the friendly national bank holds 50 million in reserves at its federal reserve district bank. the required reserves

  The market interest rate

Your child (John) has come to you for advice. He is about to enter college and has two options open to him. His first option is to study petroleum engineering. If he does this, his undergraduate degree would cost him $20,000 a year for four years. Wh..

  Write a brief overview concerning stock valuation

Write a brief overview concerning stock valuation. A brief explanation of the legal rights and privileges of common stockholders.

  Why do the differences in the pvs occur

Find the present value of $700 due in the future under each of these conditions: 10% nominal rate, semi annual compounding, discounted back 5 years. Why do the differences in the PVs occur?

  What is the equivalent present worth of the series

A series of 5 constant dollar (or real dollar) payments (beginning with $5000 at the end of the first year) are increasing at the rate of 7% per year. Assume that the average general inflation rate is 5% and the market interest rate is 12% during thi..

  Half-year convention deprecation

KOOKIS, Inc., has developed a new cooky. The firm is planning to spend $60,000 on a new oven to produce the new cooky for 3 years. The machine has an expected life of three years, a $10,000 estimated resale value, and falls under the straight-line 3-..

  Retirement-compound interest formula and annuity formula

Luis has $120,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new account. Luis also plans to put $3000/quarter into the new account until h..

  Calculate the operating cash flows

(Calculating operating cash flows) assume that a new project will annually generate revenues of $ 2,600,000. Cash expenses including both fixed and variable costs will be $ 500,000, and depreciation will increase by $ 180,000 per year. In addition, l..

  Calculate the value of your bond relative

Calculate the value of your bond relative to this interest rate using equation 11.2 in the text. Assume that i = 5%. Is your bond selling for a premium or at a discount based on your calculation?

  The constant dividend growth model

The constant dividend growth model is:

  What was your dividend yield on this stock

One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 25 percent. Your capital gain was $6 a share. What was your dividend yield on this stock?

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