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A friend of mine has a 22-year old daughter. He wants to give her a "$1,000,000 gift" for her college graduation present, with the caveat that she cannot have access to the gift for 45 years. Given that he invests in an asset that will earn 12% APR compounded annually, how much would he need to invest today?
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- Michiko and Saul are planning to attend the same university next year. The university estimates tuition, books, fees, and living costs to be 12,000 per year. Michikos father has agreed to give her the 12,000 she needs to attend the university. Saul has obtained a job at the university that will pay him 14,000 per year. After discussing their respective arrangements, Michiko figures that Saul will be better off than she will. What, if anything, is wrong with Michikos thinking?Minnie owns a qualified annuity that cost 78,000. The annuity is to pay Minnie 650 per month for life after she reaches age 65. Minnie turns 65 on September 28, 2019, and receives her first payment on November 1, 2019. a. How much gross income does Minnie have from the annuity payments she receives in 2019? b. Shortly after receiving her payment on October 1, 2034, Minnie is killed in an automobile accident. How does the executor of Minnies estate account for the annuity on her return for the year 2034? c. Assume that the accident does not occur until November 1, 2043. How does the executor of Minnies estate account for the annuity on her 2043 return?Jessie is thinking of establishing a fund for his daughter’s college education. He wants his daughter to be able to withdraw P60,000from the fund on her 18th birthday, again on her 19th birthday, again on her 20th birthday, up to her 23rd birthday. If the fund earns interest at 12% per year compounded annually, how much should Jessie deposit at the end of each year, fromthe time his daughter reaches 5 years old up to her 17th birthday?
- Meredith, who is single, would like to contribute $6,000 annually to her Roth IRA. Her AGI is $125,000. What is the maximum amount that Meredith can contribute? Show your calculations using Microsoft Excel. 2. Assume that Meredith’s AGI is $100,000. She plans to put $6,000 each year into her Roth IRA, hoping to earn 6% annually. What future value will accumulate in her Roth at the end of 20 years? 3. In part (b), instead assume that Meredith puts the $6,000 into the Roth for 15 years at 6%. How much will accumulate at the end of this period?Joanna is making a financial plan for her retirement. Today is her 35th birthday, and she receives $150,000 from her grandmother's will. She plans to retire 25 years from now when she turns 60. Once she is retired, she will need to withdraw $4,000 a month for 15 years, starting on the day she retires. She anticipates earning 6% compounded semi-annually for the entire 40 years. How much of her inheritance money must be invested today to meet her retirement goal?A woman is planning for retirement in 30 years and decides she can deposit $6,000 each year on December 31 into a retirement savings plan that she expects will pay 6% interest. In 20 years she also expects to receive a small inheritance of $12,000 that she can also put into her retirement fund. The woman anticipates that her retirement fund will need to last 20 years; she estimates that she will need $60,000 at the end of each year in retirement to cover her living expenses. Her plan is flawed. How much extra does she need to save every year (rounded to dollars and cents) to achieve her goals? (Do not round interim calculations)
- Asha feels she needs $45,000 per year in retirement. If she receives $30,000 a year from Social Security , at what interest rate must Asha invest her $25,000 of savings for her total income to be at least $45,000 per yearA man wants to help provide a college education for his young daughter. He can afford to invest $1500/yr for the next 5 years, beginning on the girl’s 5th birthday. He wishes to give his daughter $10,000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $40,000. Assuming 6% interest, what uniform annual investment will he have to make on the girl’s 9th through 17th birthdays?Mrs. Lorez wants all of her grandchildren to go to college and decides to help financially. How much must she give to each child at birth if they are to have $10,000 on entering college 18 years later, assuming 6% interest compounded annually?
- Shauna wishes to establish a trust fund from which her son can withdraw $50,000 every six months for 18 years, when he reaches 30 years old. After 8 years, he will receive $500,000 for college. The trust will be invested at 8.7% per annum compounded semi-annually. How large should the trust be?Suppose Mr. Ali wish to retire thirty years from today. He has just recieved a lump-sum amount of $30000 from inheritance, he expect that he may need $50000 on the marriage of his daughter 20 years from today. He determines that he needs $15000 per year once he retires, with the first retirement funds withdrawn one year from the day he retires. He estimates that he will earn 10% per year on the retirement funds and that he will need funds up to and including in his 20th birthday after retirement. a) how much he needs to deposit an account today so that he has enough funds to meet all his future expenditures? b) how much he needs to deposit each year in an account, starting one year from today, so that he may have enough funds to meet all his future requirements? c) suppose that an investment promises to pay a nominal 11.6 percent annual rate of interest. What is the effective annual interest rate on this investment assuming that interest is compounding (a) annually? (b) semi…As soon as she graduated from college, Kay began planning for her retirement. Her plans were to deposit $500 semiannually into an IRA (a retirement fund) beginning six months after graduation and continuing until the day she retired, which she expected to be 30 years later. Today is the day Kay retires. She just made the last $500 deposit into her retirement fund, and now she wants to know how much she has accumulated for her retirement. The fund earned 10 percent compounded semiannually since it was established. a. Compute the balance of the retirement fund assuming all the payments were made on time. b. Although Kay was able to make all of the $500 deposits she planned, 10 years ago she had to withdraw $10,000 from the fund to pay some medical bills incurred by her mother. Compute the balance in the retirement fund based on this information.
