Case 7: Better Late Than Never

shimmy 7 Its better late than never 1. What was Ryans starting salary? How a lot could he go contributed to the voluntary savings plan in his graduation exercise year of employment? RATE NPR FV PV YEARCONTRIBUTION TO SAVINGS object .05170,00066,6675th$7,333 .05270,00063,4924th$6,984 .05370,00060,4693rd$6,651 .05470,00057,8492nd$6,363 .05570,00054,8471st$6,033 Ryans stolon year salary at this company was $54,847 and he could render contributed $6,033 in his first year of employment. These were found by using the drink value formula for all five geezerhood. 2.Had Ryan interpreted advant long time of the companys voluntary retreat plan up to the maximum, every year for the bypast five years, how much money would he before long fork out accumulated in his hideaway taradiddle, assumptive a titulary rate of go across of 7%? How much more would his enthronement value score been worth had he opted for a higher encounter alternative (i. e. 100% in common stocks), which was judge to yield an mean(a) compound rate of return of 12% (A. P. R. )? YEAR SALARIES CONTRIBUTIONCONTRIBUTION TO SAVINGS PLAN 5th66,66711% =$6,033 4th63,49211%=$6,363 3rd60,46911%=$6,651 2nd57,84911%=$6,984 1st54,84711%=$7,333 make sense$33,364 FV verbalism cast . 07 NPER 5 PMT 0 PV -33364 Current accumulated in retirement account= $46,794 $46,794- $33,364= $13,430 FV Formula footstep . 12 NPER 5 PMT 0 PV -33364 Net worth of average retirement account= $58,798 If Ryan had take advantage of the retirement plan, he would currently have accumulated $13,430 anticipate at rate of return of 7%. expect a rate of 12%, he would have been worth $58,798. 4. How much would Ryan have to render all(prenominal) month, starting from the end of the future(a) month, in value to accumulate enough money for his wedding expenses, presume that his investment fund is expected to yield a rate of return of 7% per year? wedding Expense $15,000 x 1. 04= $15,600 PMT Formula Rate . 07/12 Nper 12 PV 0 FV -15600 How much needfully to be saved= $1,258. 82 Monthly 5. If Ryan starts saving at once for the 20% polish up payment on his house, how much additional money resulting he have to save all(prenominal) month? Assume an investment rate of return of 7% per year. 250,000x 1. 04= 304,163 304163x . 20= 60,832 Rate . 07/12 Nper 5 PV 0 FV -60832 How much needs to be saved= $844 Monthly 6. If Ryan wants to have a million dollars (in terms of todays dollars) when he retires at age 65, how much should he save in equal monthly deposits from the end of the next month?Ignore the cost of the wedding and the down payment on the house. Assume his savings create a rate of 7% per year (A. P. R. ). PV= gazillion x 1. 04 (. 04/12+1) 38 years work on retirement FV= 4,438,813 38 Years x 12 Months= 456 Months Iy= 7 FV= 4438000 Cy= 12 Py= 12 Monthly Payments = $1,963. 65 7. If Ryan saves up the million dollars (in terms of todays dollars) by the time of his retirement at age 65, how much no minate he withdraw each month ( inauguration one month after his retirement) in equal dollar centers, if he figures he will depart up to the age of 85 years?Assume that his investment fund yields a nominal rate of return of 7% per year. FV Formula PV 4438000 n 240 Months iy 7 Cy 12 Py 12 Withdraw amount each month 34,414 for 20 Years 8. afterward preparing a detailed budget, Ryan estimates that the maximum he will be able-bodied to save for retirement is $ three hundred per month, for the first five years. After that he is positive that he will be able to increment the monthly saving to $500 per month until retirement. If the account provides a nominal annual return of 7%, how much money will Ryan be able to withdraw per month during his retirement phase?PV Formula Rate . 07 Nper 5 PMT 0 PV 21,478 300x 1. 01 x 396= 200,289 Rate . 07 Nper 33 PMT 0 PV 972,321/ 20 Years x7/12+1= 7,600 Monthly 9. What is the lesson to be learned from this exemplar? Explain. I have learned that yo u must beginning saving for a retirement plan early because by the time you retire your investment can increase tremendously, allowing a future for the rest of your family as well as to be able to live comfortably while retired.