You are 25 years old and plan to remain single. You would like to have $750,000 in 15 years so you can retire at age 40.

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You Are 25 Years Old And Plan To Remain Single You Would Like To Have 750 000 In 15 Years So You Can Retire At Age 40 1 (148.39 KiB) Viewed 64 times

You are 25 years old and plan to remain single. You would like to have $750,000 in 15 years so you can retire at age 40. 1) How much would you need to invest each year, assuming you invest at the end of each year and can earn 10% per year on your money? a) Show the formula and computation using the Future Value of an Annuity Table Method. (35 pts) b) Show the TIBAIl calculator steps. (35 pts) 2) Diagram the cash flows and use Future Value of a Single Sum to show what each contribution would be worth at the end of 15 years. (30 pts) Sum the ending value for all 15 years (it should total to $750,000). (4 pts) 3) If you were to put the entire $750,000 into AAA corporate bonds at the historic average yield, how much could you earn in annual interest income? (10 pts) 4) If you could collect $40,000 per year in Social Security Retirement Income (taking into account inflation of 3.5% per year: ~24,000*1.035^15) and $30,000 per year from combined interest, dividends and withdrawals from your company 401-K savings, how much in total will your combined income be (including the interest income on the $750,000)? (10 pts) Annual Savings required to fund $750,000 @ 10%/yr for 15 years 1a) FVA = PMT * FVIFA-i-n 1b) TIBAII Interest Income 3) 4) Social Security Combined interest, dividends and withdrawals from 401-K Total Income 1 Future Value Note: 15 at Year 15 FV = PV *(1+i)^n 2 3 4 5 6 7 8 9 10 11 12 13 14 2) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total