Use what you have learned about the time value of money to analyze each of the...

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Finance

Use what you have learned about the time value of money toanalyze each of the following decisions:
Decision #2: Planning forRetirement
Erich and Mallory are 22, newly married, and ready to embark onthe journey of life. They both plan to retire 45 yearsfrom today. Because their budget seems tight right now, they hadbeen thinking that they would wait at least 10 years and then startinvesting $1800 per year to prepare for retirement. Mallory just told Erich, though, that she had heard that they wouldactually have more money the day they retire if they put $1800 peryear away for the next 10 years - and then simply let that moneysit for the next 35 years without any additional payments – thenthey would have MORE when they retired than if they waited 10 yearsto start investing for retirement and then made yearly payments for35 years (as they originally planned to do). Please help Erich and Mallory make an informeddecision:
Assume that all payments are made at the END a year(or month), and that the rate of return on all yearly investmentswill be 7.5% annually.
(Please do NOT ROUND when entering “Rates” for any ofthe questions below)
How much money will Erich and Mallory have in 45 years if theydo nothing for the next 10 years, then put $1800 per yearaway for the remaining 35 years?
How much money will Erich and Mallory have in 10 years if theyput $1800 per year away for the next 10 years?
How much will the amount you just computed grow to if itremains invested for the remaining 35 years, but without anyadditional yearly deposits being made?
How much money will Erich and Mallory have in 45 years if theyput $1800 per year away for each of the next 45 years?
How much money will Erich and Mallory have in 45 years if theyput away $150 per MONTH at the end ofeach month for the next 45 years? (Remember to adjust7.5% annual rate to a Rate per month!)
If Erich and Mallory wait 25 years (after the kids are raised!)before they put anything away for retirement, how much will theyhave to put away ***at the end of* *eachyear*** for 20 years in order to have $700,000 saved upon the first day of their retirement 45 years from today?

Answer & Explanation Solved by verified expert

4.2 Ratings (911 Votes)

They will have 27765289 at the end of 45 year if they startinvesting at the end of 10 year Calculation is given belowSimilarly they See Answer

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Use what you have learned about the time value of money toanalyze each of the following decisions:Decision #2: Planning forRetirementErich and Mallory are 22, newly married, and ready to embark onthe journey of life. They both plan to retire 45 yearsfrom today. Because their budget seems tight right now, they hadbeen thinking that they would wait at least 10 years and then startinvesting $1800 per year to prepare for retirement. Mallory just told Erich, though, that she had heard that they wouldactually have more money the day they retire if they put $1800 peryear away for the next 10 years - and then simply let that moneysit for the next 35 years without any additional payments – thenthey would have MORE when they retired than if they waited 10 yearsto start investing for retirement and then made yearly payments for35 years (as they originally planned to do). Please help Erich and Mallory make an informeddecision: Assume that all payments are made at the END a year(or month), and that the rate of return on all yearly investmentswill be 7.5% annually. (Please do NOT ROUND when entering “Rates” for any ofthe questions below)How much money will Erich and Mallory have in 45 years if theydo nothing for the next 10 years, then put $1800 per yearaway for the remaining 35 years?How much money will Erich and Mallory have in 10 years if theyput $1800 per year away for the next 10 years?How much will the amount you just computed grow to if itremains invested for the remaining 35 years, but without anyadditional yearly deposits being made?How much money will Erich and Mallory have in 45 years if theyput $1800 per year away for each of the next 45 years?How much money will Erich and Mallory have in 45 years if theyput away $150 per MONTH at the end ofeach month for the next 45 years? (Remember to adjust7.5% annual rate to a Rate per month!)If Erich and Mallory wait 25 years (after the kids are raised!)before they put anything away for retirement, how much will theyhave to put away at the end of eachyear for 20 years in order to have $700,000 saved upon the first day of their retirement 45 years from today?