raig also is beginning to think about his retirement. He let you know that he would like to retire 62. He plans on saving using one of the following two strategies: Save $2,700 per year in an IRA beginning now and ending when he is 62 (25 years) or Wait until he is 47 to start saving and then save $4,500 per year for the next 15 years. Assume that he will earn an average of 10% per year on his investments How much out-of-pocket cash will Craig invest under these two options? How much savings will he have accumulated at the age of 62 under these two options? Explain to Craig which option you feel would be the best. Be sure to answer in complete sentences. If Craig lets the savings continue to grow for 10 more years (with no more out-of-pocket investments), under each option, what will the investment be worth when he is at the age of 72?
raig also is beginning to think about his retirement. He let you know that he would like to retire 62. He plans on saving using one of the following two strategies: Save $2,700 per year in an IRA beginning now and ending when he is 62 (25 years) or Wait until he is 47 to start saving and then save $4,500 per year for the next 15 years. Assume that he will earn an average of 10% per year on his investments How much out-of-pocket cash will Craig invest under these two options? How much savings will he have accumulated at the age of 62 under these two options? Explain to Craig which option you feel would be the best. Be sure to answer in complete sentences. If Craig lets the savings continue to grow for 10 more years (with no more out-of-pocket investments), under each option, what will the investment be worth when he is at the age of 72?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Retirement Options
Craig also is beginning to think about his retirement. He let you know that he would like to retire 62. He plans on saving using one of the following two strategies:
- Save $2,700 per year in an IRA beginning now and ending when he is 62 (25 years) or
- Wait until he is 47 to start saving and then save $4,500 per year for the next 15 years.
Assume that he will earn an average of 10% per year on his investments
- How much out-of-pocket cash will Craig invest under these two options?
- How much savings will he have accumulated at the age of 62 under these two options?
- Explain to Craig which option you feel would be the best. Be sure to answer in complete sentences.
- If Craig lets the savings continue to grow for 10 more years (with no more out-of-pocket investments), under each option, what will the investment be worth when he is at the age of 72?
Transcribed Image Text:How much out-of-pocket cash will Craig invest under the two options:
How much will Craig have accumulated at age 62 under the two options:
Option 1:
Option 2:
=
Explain which option would be best for Craig and why
If Craig let the savings continue to grow for 10 more years, what will the investment be worth when he is age 62:
Option 1:
Option 2:
II
||
=
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