Business, 05.06.2020 00:06 ijohnh14

To live comfortably in retirement, you decide you will need to save $2 million by the time you are 65 (you are 30 years old today). You will start a new retirement savings account today and contribute the same amount of money on every birthday up to and including your 65th birthday. Using TVM principles, how much must you set aside each year to make sure that you hit your target goal if the interest rate is 5%? What flaws might exist in your calculations, and what variables could lead to different outcomes? What actions could you take ensure you reach your target goal?

Answers: 3

Show answers

Answers

Answer from: andr8aa

To live in conformably you need to retire and decide that you need to pay about 2 million dollars to save and by the time of 65 need to start a retirement plan, the TVM concept the target goals has a interest rate of 5%.

For which we need to calculate the

FV of Annuity = Annuity ( ( (1 + i)^ n -1 )/ i )2,000,000 = A ( ( ( 1 + 5%) ^ 35 -1 ) / 5%)2,000,000 = A ( (1.05^35 -1 )/5%)2,000,000 = A (90.3203074)A = 2,000,000/90.3203074Hence A = $22,143.

Learn more about the to live.

link.

Answer from: TheCat250

Please refer to Explanation

Explanation:

1) You want to have $2 million when you are 65 which is 35 years from now. The interest rate is 5% and you need to know how much to deposit per year to get to that level. The $2 million is therefore the future value of your contributions which makes this an Annuity.

To calculate for the Annuity amount use the following formula,

FV of Annuity = Annuity ( ( (1 + i)^ n -1 )/ i )

2,000,000 = A ( ( ( 1 + 5%) ^ 35 -1 ) / 5%)

2,000,000 = A ( (1.05^35 -1 )/5%)

2,000,000 = A (90.3203074)

A = 2,000,000/90.3203074

A = $22,143

You should set aside $22,143 every year.

2) The major flaw in the calculation is the assumption that the interest rates will remain the same over the 35 years. This is almost impossible and will affect the amount that would need to be deposited every year to achieve the target. If the interest rate should increase then it will increase the amount that you are to get meaning you can get more than $2 million then you would not have to deposit as much to get to $2 million. If it decreases however, you will have to deposit more to get to the required $2 million because the amount earned in interest will not enable you to get to $2 million in that timeframe. .

Answer from: Quest

answer; test-retest;

Answer from: Quest

you have to put the parentheses like this:

$(85-4) \div 9 \times 10$

in fact, you have to perform the operation inside parentheses first, and then proceed in order:

$81 \div 9 \times 10 = 9 \times 10 = 90$

Other questions on the subject: Business

Business, 21.06.2019 18:20, montamonta0204

Which of the following housing decisions provides a person with both housing and an investment? a. selling a share in a cooperative. b. buying a single-family home. c. renting an apartment. d. subletting a condominium. 2b2t

Answers: 2

continue

Business, 21.06.2019 19:20, ellycleland16

Which of the following best explains why large companies have an advantage over smaller companies? a. economies of scale make it possible to offer lower prices. b. the production possibilities frontier is wider for a larger company. c. decreasing marginal utility enables more efficient production. d. increasing the scale of production leads to a reduction in inputs.2b2t

Answers: 1

continue

Business, 22.06.2019 07:00, robertotugalanp1wlgs

Bridgeport company began operations at the beginning of 2018. the following information pertains to this company. 1. pretax financial income for 2018 is $115,000. 2. the tax rate enacted for 2018 and future years is 40%. 3. differences between the 2018 income statement and tax return are listed below: (a) warranty expense accrued for financial reporting purposes amounts to $7,500. warranty deductions per the tax return amount to $2,200. (b) gross profit on construction contracts using the percentage-of-completion method per books amounts to $94,700. gross profit on construction contracts for tax purposes amounts to $67,100. (c) depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. depreciation of these assets amounts to $75,700 for the tax return. (d) a $3,600 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. 4. taxable income is expected for the next few years. (assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) prepare the reconciliation schedule for 2017 and future years. (b) prepare the journal entry to record income tax expense for 2017. (c) prepare the income tax expense section of the income statement beginning with “income before income taxes.” (d) determine how the deferred taxes will appear on the balance sheet at the end of 2017.

Answers: 1

continue

Business, 22.06.2019 15:00, shakaylaousley1997

Portia grant is an employee who is paid monthly. for the month of january of the current year, she earned a total of $8,388. the fica tax for social security is 6.2% of the first $118,500 earned each calendar year and the fica tax rate for medicare is 1.45% of all earnings. the futa tax rate of 0.6% and the suta tax rate of 5.4% are applied to the first $7,000 of an employee's pay. the amount of federal income tax withheld from her earnings was $1,391.77. what is the total amount of taxes withheld from the portia's earnings?

Answers: 2

continue

You know the right answer?

To live comfortably in retirement, you decide you will need to save $2 million by the time you are 6...