You are now 40 years old and have a plan to retire at age 60....
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You are now 40 years old and have a plan to retire at age 60. At the moment, you have a bond portfolio worth $150,000, an investment in a pension fund worth $300,000, and a FOREX account worth $100,000. You expect that your bond portfolio will provide returns of 10 percent, compounded semi- annually, your investment in a pension fund will earn 10.5 percent annually , and the FOREX account earns 6.25 percent, compounded monthly. a. In case you cannot save more money, how much will your investments be worth at the time you retire? (2 pts) b. Assume that you will invest $10,000 every year in your pension fund for the next 20 years (starting from now). How much will your investments be worth when you retire at 60? (2 pts) C Assume that you expect to live 20 years after you retire (until age 80). At the time you start your retirement, you take all of your investments and place them in an account that pays 10 percent. If you start withdrawing funds starting at age 60, how much can you withdraw every year (e.g., an ordinary annuity) and leave nothing in your account after a 20th and final withdrawal at age 80? (2 pts) You want your current investments, which are described in part B to support a perpetuity that starts a year from now. How much can you withdraw ach year without touching your principal? (1 pt) A BI SE % 3
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