You switch from coffee drinking to investing in stock market

Assignment Help Financial Management

Reference no: EM131965273

Each student should answer question 1 A and 1 B. Answer to the question 1 is related to your actual age. Simplify your age to the month, if for example your age is 20 years 1 month and 19 days, use 20 years and 2 months. If your age is 34 years and one month and 3 days, use 34 years and one month, in other words, bring your age to closest month.

(Age is 28 years and 6 months) Assume you drink one coffee per day, 5 days a week. Assume coffee price is $4.00. That makes it $20 per week and $80 per month. Assume you can invest $80 per month in the stock market and assume you can earn 1 % per month on your stock investment or 12 % per year.

A. At your retirement, when you are 65 years old, how much you will have in your retirement account if you switch from coffee drinking to investing in the stock market?

B. Assume that when you get to 65 (retirement age) you switch your funds from stock market investment to bond market investment.Assume you can earn 7% on your bond investment. You decide to withdraw a constant amount each year for the next 20 years when you get to retirement age of 65. How much will be your annual withdrawal from age 66 to 85 (Nothing left at 85) if you switch your coffee drinking to stock and bond investments.

Reference no: EM131965273

Questions Cloud

Why hedging with futures contracts may not be perfect : Should the company take a long or short position in the futures market? Explain. Why hedging with futures contracts may not be perfect?

Japan approaches cybersecurity : What are the similarities and differences in strategies and how the U.S, UK, and Japan approaches cybersecurity?

What are the relationships between glendas symptoms : The objective of the clinical case study report is to gain comprehensive knowledge about kidney disease and its management.

Estimate the before-tax and after- tax cost of debt : Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates.

You switch from coffee drinking to investing in stock market : how much you will have in your retirement account if you switch from coffee drinking to investing in the stock market?

What would be the company new wacc : What would be the company's new WACC if it adopted the proposed change in capital structure? Round your answer to 2 decimal places.

What is own conclusion about the position of asian pacific : After going and reading Mia Tuan's book, "Forever Foreigners or Honorary Whites?" and Gary Okihiro's article "Is Yellow...Black or White?"

The assumptions of the percentage of sales model include : The assumptions of the percentage of sales model include. The cost pool divided by the cost base is the.

Explain ways in which list-processing capabilities of scheme : Explain two ways in which the list-processing capabilities of Scheme and Prolog are similar? Perl allows both statistics and a kind of dynamic scoping.

User Account

All Pages