28 d. You just received an inheritance worth $150,000. You want to retire in 25 years and you plan to contribute an29 additional $15,000 at the end of each year. If you need $1,500,000 in order to retire, what interest rate must you earn30 in order to reach your goal?3132333435373839404142434546Ready1Time Value of MoneyAccessibility: Investigate61°FMostly cloudyGCapital Budgeting | Unequal Lives | Optimal Capital StructureQ Search●000000000●●0000009.0UO0C(31720∞000000000hp0000018

The time value of money is a foundational finance principle that states that the worth of money when…

d. You just received an inheritance worth $150,000. You want to retire in 25 years and you plan to contribute an additional $15,000 at the end of each year. If you need $1,500,000 in order to retire, what interest rate must you earn in order to reach your goal?

d. You just received an inheritance worth $150,000. You want to retire in 25 years and you plan to contribute an additional $15,000 at the end of each year. If you need $1,500,000 in order to retire, what interest rate must you earn in order to reach your goal?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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28 d. You just received an inheritance worth $150,000. You want to retire in 25 years and you plan to contribute an
29 additional $15,000 at the end of each year. If you need $1,500,000 in order to retire, what interest rate must you earn
30 in order to reach your goal?
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Time Value of Money
Accessibility: Investigate
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Capital Budgeting | Unequal Lives | Optimal Capital Structure
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Assume your goal in life is to retire with one million dollars. How much would you need to save at the end of each year if interest rates average 4% and you have a 25-year work life? Question 7Answer a. $40,000 b. $24,012 c. $200,204 d. $752,952
You would like to retire in 50 years, as a millionaire. If you have $20 000 today what rate of return do you need to earn to achieve your goal? Select one: a. 8.00% b. Cannot be calculated c. 8.14% d. 8.41%
Assume your goal in life is to retire with one million dollars. How much would you need to save at the end of each year if interest rates average 4% and you have a 25-year work life? a. $752,952 b. $200,204 c. $40,000 d. $24,012
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Suppose you deposited $39,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be in the account after 8 months, assuming each month has 30 days? Select the correct answer. O a. $40,389.07 O b. $40,375.67 O c. $40,402.47 d. $40,368.97 Oe. $40,382.37
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1On the day you retire you have $500,000 saved. You expect to live another 30 years during which time you expect to earn 8% on your savings while inflation averages 3.5% annually. Assume you want to spend the same amount each year in real terms and die on the day you spend your last dime. What real amount will you be able to spend each year?  a. $61,931.78 b. $79,211.09 c. $79,644.58 d. $30,695.77 2Now consider your financial objective is to save $500,000 for preparing your retirement, assuming 30 years from now. If you invest your RRSP savings in a mutual fund which can realize an average return of 10% per year. To achieve your goal, how much do you need to save at the end of each year over the 30-year period? a. 4,039.26 b. 3,039.62 c. 2,985.54 d. 10,988.32 3What is the FV of $100 deposited today into an account with an APR 12.6%, compounded semiannually for 10 years? a. 1478.96 b. 3460.06 c. 327.63 d. 339.36
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