Martinezberkdemarzoharfordproblem4 25start 02u1ru0l
Martinezberkdemarzoharfordproblem4 25start 02u1ru0l
Martinezberkdemarzoharfordproblem4 25start 02u1ru0l
You are trying to decide how much to save for retirement. Assume you plan to save $5,000 pe
with the first investment made one year from now. You think you can earn 10% per year on y
investments and you plan to retire in 43 years, immediately after making your last $5,000 inve
Complete the steps below using cell references to given data or previous calculations. In some
simple cell reference is all you need. To copy/paste a formula across a row or down a column
absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function
used, the directions will specify the use of that function. Do not type in numerical data into a c
function. Instead, make a reference to the cell in which the data is found. Make your computa
in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest app
of the data in your formulas, usually the Given Data section.
a. How much will you have in your retirement account on the day you retire?
b. If, instead of investing $5,000 per year, you wanted to make one lump-sum investment
your retirement that will result in the same retirement saving, how much would that lum
need to be?
c.
If you hope to live for 20 years in retirement, how much can you withdraw every
year in retirement (starting one year after retirement) so that you will just exhaust your
with the 20th withdrawal (assume your savings will continue to earn 10% in retirement
d.
If, instead, you decide to withdraw $300,000 per year in retirement (again with
the first withdrawal one year after retiring), how many years will it take until you exhau
savings?
e.
Assuming the most you can afford to save is $1,000 per year, but you want to retire wit
million in your investment account, how high of a return do you need to earn on your
investments?
a. How much will you have in your retirement account on the day you retire?
Future value $ 2,962,003.46
b. If, instead of investing $5,000 per year, you wanted to make one lump-sum investment
your retirement that will result in the same retirement saving, how much would that lum
need to be?
c.
If you hope to live for 20 years in retirement, how much can you withdraw every
year in retirement (starting one year after retirement) so that you will just exhaust your
with the 20th withdrawal (assume your savings will continue to earn 10% in retirement
Years of withdrawal 20
d. If, instead, you decide to withdraw $300,000 per year in retirement (again with
the first withdrawal one year after retiring), how many years will it take until you exhau
savings?
e. Assuming the most you can afford to save is $1,000 per year, but you want to retire wit
million in your investment account, how high of a return do you need to earn on your
investments?
Rate of return
Requirements
1 In cell D17, by using cell references, calculate the future value of the yearly savings on
you retire (1 pt.). Note: The output of the expression or function you typed in this cell i
expected as a positive number.
2 In cell D21, by using cell references, calculate the lump-sum that you need to invest tod
order to save the same amount as with the yearly savings (1 pt.). Note: The output of th
expression or function you typed in this cell is expected as a positive number.
3 In cell D27, by using cell references, calculate the amount that you can withdraw from
retirement account every year (1 pt.). Note: The output of the expression or function yo
in this cell is expected as a positive number.
4 In cell D33, by using cell references, calculate the number of years that it will take to d
your retirement savings if you withdraw a certain amount per year (1 pt.).
5 In cell D40, by using cell references, calculate the return that you need to earn on your
savings for a certain payment to reach your goal at retirement. Note: For this particular
only use the first four parameters of the RATE function. Assume Annual savings as a c
outflow and the Future value as an cash inflow. (1 pt.).
ou plan to save $5,000 per year
n earn 10% per year on your
king your last $5,000 investment.
y you retire?
ne lump-sum investment today for
how much would that lump sum
ou withdraw every
ou will just exhaust your savings
o earn 10% in retirement)? ($2,962,003.46)
y you retire?
ne lump-sum investment today for
how much would that lump sum
ou withdraw every
ou will just exhaust your savings
o earn 10% in retirement)?
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