User Account

All Pages

Who intend to begin saving money for retirement

Assignment Help Financial Management
Reference no: EM131176446

David and William are brothers who intend to begin saving money for retirement when each is exactly 25. Each brother intends to save $3,600 per year before taxes and invest the money to accumulate wealth and to supplement his income in retirement. Dan Plans to invest his savings into a Traditional IRA and anticipates an average annual return of 9%. Wayne plans to invest his savings into a Roth IRA account and also anticipates an average annual return of 9% Both brothers expect to have an annual income tax rate of 25% during their working years and also in their retirement years.

1) How much money will David invest per year after taxes into his traditional IRA Investment?

2) How much will David have in his Traditional IRA account at age 65?

3) If a 20 year annuity is purchased with this sum of money at age 65, how much annual income after taxes will be provided if the annuity contract has a 4% interest rate?

4) How much money will William invest per year after taxes into his Roth IRA Investment Account?

5) How much will William have in his Roth IRA Account at age 65?

6) If a 20 year annuity is purchased with this sum of money at age 65, how much annual income after taxes will be provided if the annuity contract has a 4% interest rate?

7) If both brothers postpone the start of their investment plans until age 35, how much will each have at age 65?

Reference no: EM131176446

Questions Cloud

Calculate the percent of total return : Assume that one year ago, you bought 200 shares of a mutual fund for $21 per share, you received an income distribution of $0.11 cents per share and a capital gain distribution of $0.32 cents per share during the past 12 months. Also assume the marke..
Nonconstant growth valuation : A company currently pays a dividend of $3.75 per share (D0 = $3.75). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.1..
What will be the initial outlay for the project : The faraway moving company is in a major plant of expansion that involves the expenditure of $211 million in the coming year.The firm plans on financing the expansion through retension of $140 in firm earning and borrowing the remaining $71 million. ..
Currently the average house in your town cost : Currently the average house in your town cost $275,000 and is increasing in value by 6.0% per year. In six years you plan to purchase an average house and will need to have a 20% down payment. If you currently have $3,900 in your investment account, ..
Who intend to begin saving money for retirement : David and William are brothers who intend to begin saving money for retirement when each is exactly 25. Each brother intends to save $3,600 per year before taxes and invest the money to accumulate wealth and to supplement his income in retirement. Ho..
What is the total rate of return on the bond : Consider a bond paying a coupon rate of 7.75% per year semiannually when the market interest rate is only 3.1% per half-year. The bond has six years until maturity. Find the bond's price today and twelve months from now after the next coupon is paid...
Calculate expected dividend yield-growth rate in dividends : Return on Common Stock You buy a share of The Ludwig Corporation stock for $18.20. You expect it to pay dividends of $1.06, $1.15, and $1.2476 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $27.01 at the end of 3 years. C..
Contrast the three different theories of money demand : Compare and contrast the three different theories of money demand. Given the quantitative theory of money, What happens to real GDP if the money supply is cut in half, velocity is stable and prices are sticky? What happens to prices if the money supp..
What is rate of return you earned on japanese securities : One year ago you converted $1,000 to yen at the rate of 125 yen to $1 and invested in Japanese securities. You just sold the securities for 137,500 yen. The current exchange rate is 111 yen to $1. What is the rate of return you earned on the Japanese..

Reviews

Write a Review

Financial Management Questions & Answers

  Real value of total amount of money issued by private banks

Consider an economy in which people wish to hold money balances worth a total of 5 million goods. They are indifferent between money issued by the central bank and money issued by private banks. What rate of interest ρ must the central bank offer to ..

  Calculating its earnings available to common stockholders

Travels Sailing, Inc. sells sailing trips at the seashore. Travels has asked for help in calculating its earnings available to common stockholders. The firm generated revenues of $35,000 from its products. The operating costs to produce the products ..

  What is the amount of the change in net working capital

Fallway, Inc. had current assets of $121,800 and current liabilities of $114,300 last year. This year, the current assets are $118,600 and the current liabilities are $100,400. The depreciation expense for the past year is $13,500 and the interest pa..

  What is the investors overall profit and loss

On Dec 31 an investor longs 18 contracts of Gold with a settlement price of 1185.40. What is the investors overall profit/loss? The contract size is 100 troy oz

  What is this projects internal rate of return

Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $950000 and will generate net cash inflows of $17,000 per year for 11 years. What is the project's NPV..

  What annual annuity cash flow

You have the opportunity to purchase an asset that is expected to generate cash flows for the next 19 years. The purchase price of the asset is $18,371,356. What annual annuity cash flow would you have to expect to receive over the life of the asset ..

  Treasury bond-default risk premium and liquidity premium

A 5-year Treasury bond has a 4.05% yield. A 10-year Treasury bond yields 6.15%, and a 10-year corporate bond yields 9.35%. The market expects that inflation will average 2.1% over the next 10 years (IP10 = 2.1%). A 5-year corporate bond has the same ..

  The planned purchase of the house assets

Rocco and Stella Thompson are in their 20s and are just about to make one of the most important commitments of their lives is buying a home and starting a family. They have been living in a small apartment in Denver, since their marriage and college ..

  An investment offers

An investment offers $3,300 per year for 19 years, with the first payment occurring one year from now. If the required return is 8 percent, the present value of the investment is $___. If the payments occurred for 34 years, the present value of the i..

  Semi-annual compounding-what is yield to call for bonds

Atlantis Fisheries issues zero coupon bonds on the market at a price of $421 per bond. These are callable in 7 years at a call price of $640. Using semi-annual compounding, what is the yield to call for these bonds? (Do not round intermediate calcula..

  Distinguish between conventional eoq and jit inventory model

JIT has gained in popularity throughout the business world. Yet we also see companies such as Amazon.com building huge warehouses. Conduct on the topic of JIT and EOQ and write a 1–2-page paper arguing for or against adopting JIT for a company such a..

  Lockbox system to reduce the firm collection times

It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. What is the reduction in outstanding cash balan..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd