What will be george expected accumulation in each account

Assignment Help Financial Management

Reference no: EM132039132

George More is a participant in a defined contribution pension plan that offers a fixed-income fund and a common stock fund as investment choices. He is 40 years old and has an accumulation of $100,000 in each of the funds. He currently contributes $1,500 per year to each. He plans to retire at age 65, and his life expectancy is age 80.

a. Assuming a 3% per year real earnings rate for the fixed-income fund and 6% per year for common stocks, what will be George’s expected accumulation in each account at age 65? (Do not round time value factors and round your final answer to the nearest dollar amount.)

Fixed Income Fund

Common Stock Fund

b. What will be the expected real retirement annuity from each account, assuming these same real earnings rates? (Do not round time value factors and round your final answer to the nearest dollar amount.)

Fixed Income Fund

Common Stock Fund

c. If George wanted a retirement annuity of $30,000 per year from the fixed-income fund, by how much would he have to increase his annual contributions? (Do not round time value factors and round your final answer to the nearest dollar amount.)

Increase his annual contributions by?

Reference no: EM132039132

Questions Cloud

Estimated cash flows for two proposed projects : Your boss, the chief financial officer (CFO) for Southern Textiles, has just handed you the estimated cash flows for two proposed projects.

Step tree to value european call option on the stock : Use a two-step tree to value a European call option on the stock with a strike price of $60 that expires in 6 months. Each step is 3 months.

What was the effective borrowing rate for this korean firm : What was the effective borrowing rate (measured in Korean won) for this Korean firm?

Beverly bonds to make jane interested in making switch : What rate must be set on the Beverly bonds to make Jane interested in making a switch?

What will be george expected accumulation in each account : What will be George’s expected accumulation in each account at age 65?

What is its pretax cost of debt-what is the cost of equity : If the company’s cost of equity is 16 percent, what is its pretax cost of debt? what is the cost of equity?

What is equivalent annual effective interest rate on loan : The annual interest rate on this loan is 13.4%. What is the equivalent annual effective interest rate on this loan?

What are the main responsibilities of the board of directors : What are the main responsibilities of the board of directors? How does the Sarbanes-Oxley Act and the Dodd-Frank Act affect the board of directors at Dropbox?

Winner stocks and loser stocks both tend to be growth stocks : Historically, winner stocks and loser stocks both tend to be growth stocks; they both tend to be medium size stocks.

User Account

All Pages