Question

1) You are 50 years old and proud of having $75,000 invested in a mutual fund earning an impressive 17% per year. You want to retire when you are 65 years old and are confident you'll reach your goal of $1,000,000 by then. Will you make it? If not, what yield would see that you do? 2) Jack and Jill want to retire when they accumulate $1,500,000 in their individual retirement funds. They figure that they can just live off on the interest after that on perpetuity, no matter how long they live. Both of them are starting off today with $100,000 each, but Jill has her money invested in a mutual fund earning 11% per year, compounded semi-annually, while Jack is earning 10.50% with daily compounding. How long will it take each to retire? Who will retire first? 3) You just turned 18 years old today and decided you want to accumulate $5,000,000 for retirement. You figure you can start making weekly deposits into a mutual fund that promises to pay an average yield of 13% per year. You intend to make the first deposit at the end of this week and retire exactly on the day of your 65th birthday. Assuming that the predicted yield of 13% is indeed realized how much money should you deposit weekly in the mutual fund to meet your goal? 4) You have a turtle that you love to death. Her name is Cassiopeia You found her roaming the streets two years ago, but have no idea how old she actually is. You do know that turtles live longer than humans, so you figure that you want to leave an endowment in a trust to secure a place for her in a pet resort for as long as she lives (whatever that may be). How much money would it take to secure $1.800 a year in perpetuity from the trust, if the annual rate of return of the trust's investment portfolio is 7%? 5 Your parents are planning to retire in 18 venre They currently have $250.000 and

Answer 1

Future value Present value x (1+i+n)^nt Value at retirement = $790,404.11 $75,000 x (1+17%)^{15) No, not reached the goal To reach $1,000,000 Yield would be = 18.85% (1000000/75000)^(1/15) -1 b. Borrow today $78.50 [84 1.07