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    kowens3's Avatar
    kowens3 Posts: 1, Reputation: 1
    New Member
     
    #1

    Oct 29, 2006, 10:22 AM
    Business Finance Question
    You are 40 years old and plan to retire in exactly 20 years. Starting 21 years from now you will need to with draw $5,000 per year from your retirement fund to supplement your social security payment. If you expect to live to age eighty-five how much should you place in the retirement fund each year for the next 20 years to reach your retirement goal, assuming you can earn 12% per year on your retirement fund investment? Please Show formulas and input so that I can understand.
    RichardBondMan's Avatar
    RichardBondMan Posts: 832, Reputation: 66
    Senior Member
     
    #2

    Oct 30, 2006, 09:17 PM
    Taken from TIAA CREF.org website (Teacher's Insurance & Annuity Assoc, College Retirement Equities Fund),



    Compute how much you'll need to save to reach a future income goal. The income calculation assumes systematic withdrawals that exhaust your principal and accrued earnings over the specified payout period. If you want a lump-sum amount rather than income over time, enter 1 in the Duration field.

    Annual income goal in constant (i.e. inflation-adjusted) dollars $

    Years to save

    Duration (for how many years do you need income?)

    Initial investment $

    Assumed annual investment return* %

    Inflation rate %

    Average annual contribution increase, if any %

    You need to invest or save $ 98,539
    ... once a month: $ 107
    ... or once a year: $ 1,284
    ... or more as an initial investment: $ 10,215


    All calculations assume beginning of the month investment. The result shown does not reflect returns from an actual investment.



    * If not held in a tax-deferred plan, use after-tax rate of return.
    Jacdesha's Avatar
    Jacdesha Posts: 1, Reputation: 1
    New Member
     
    #3

    Aug 4, 2007, 03:37 PM
    The following tabulation gives earnings per share figures for the Foust Company during the
    Preceding 10 years. The firm’s common stock, 7.8 million shares outstanding, is now (1/1/03)
    Selling for $65 per share, and the expected dividend at the end of the current year (2003) is
    55 percent of the 2002 EPS. Because investors expect past trends to continue, g may be based
    On the earnings growth rate. (Note that 9 years of growth are reflected in the data.)
    YEAR EPS YEAR EPS
    1993 $3.90 1998 $5.73
    1994 4.21 1999 6.19
    1995 4.55 2000 6.68
    1996 4.91 2001 7.22
    1997 5.31 2002 7.80
    The current interest rate on new debt is 9 percent. The firm’s marginal tax rate is 40 percent.
    Its capital structure, considered to be optimal, is as follows:
    Debt $104,000,000
    Common equity 156,000,000
    Total liabilities and equity $260,000,000
    a. Calculate Foust’s after-tax cost of new debt and common equity. Calculate the cost of equity
    As ks  D1/P0  g.
    b. Find Foust’s weighted average cost of capital.
    hakimah's Avatar
    hakimah Posts: 1, Reputation: 1
    New Member
     
    #4

    Jul 18, 2012, 09:59 PM
    mary will receive 12,000 per year for the next 10 years as royalty for her work on a finance book. What is the present value of her royalty income if the opportunity cost is 12 percent?

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