oe's starting salary as a mechanical engineer is around 100,000. Joe is planning to place a total of 14% of his salary each year in the mutual fund. Joe expects a 7% salary increase each year for the next 25 years of employment. If the mutual fund will average 13% annual return over the course of his career, what can Joe expect at retirement?

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Keith LeannonLv2

23 May 2018

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$30,000 QUESTION 3 Imagine you live in a society with progressive taxation. Your friend makes half of your salary and pays 20 percent in income taxes. Which rate most likely would be your income tax rate? (5 points) 2 percent 10 percent 20 percent 40 percent QUESTION 4 02_08_g4_q1.png Look at the bar graph. What kind of tax is depicted here? (5 points) Flat Proportional Progressive Regressive QUESTION 5 Which of these is an example of indirect tax? (5 points) Corporate income tax Gasoline tax Paycheck withholdings Property tax QUESTION 6 02_08_g6_q1.jpg Look at the graph. How does the tax shown differ from a proportional tax? (5 points) A progressive tax increases with income level; a proportional tax decreases with income level. A regressive tax decreases with income level; a proportional tax is the same percentage for everyone. A progressive tax increases with income level; a proportional tax is the same percentage for everyone. A regressive tax is the same percentage for everyone; a proportional tax increases with income level. QUESTION 7 Which of these investments may pay dividends? (5 points) Bonds Savings accounts Certificates of deposit Stocks QUESTION 8 02_08_g8_q1.jpg Assume that the blue section (D) of the chart stands for stocks and the red (A) for mutual funds. This would most likely represent the portfolio of a (5 points) young investor middle-aged investor nearly-retired investor elderly investor QUESTION 9 Assume that the blue section (D) of the chart stands for stocks and the red (A) for mutual funds. This would most likely represent the portfolio of a (5 points) young investor middle-aged investor nearly-retired investor elderly investor QUESTION 9 Which of the following investment plans best reflects diversification? (5 points) Ben has an investment portfolio with numerous stocks and futures. Kenya invests in stocks, bonds, and mutual funds. Jeremiah takes out a CD and keeps the rest of his money in a savings account. Molly splits her investment between mutual funds and a money market account. QUESTION 10 Rudy is a 52-year-old freelance writer who wants a short-term, low-risk investment with low liquidity. Which of these investment vehicles should he consider? (5 points) CD IRA Mutual fund Stocks QUESTION 11 Hometown Bank Products Minimum Opening Deposit Interest Paid per Year Monthly Fee Checking $100.00 0.00% $0.00 Savings $250.00 0.50% $0.00 Platinum Savings $1,000.00 0.75% $10.00 CD (1year) $1,000.00 1.05% $0.00 CD (5 year) $1,000.00 1.80% $0.00 Money Market $1,000.00 0.75% $10.00 Vesna has $1,000 to invest, and she will need to have her money available in the next six months. Which product will yield her the highest interest in her time frame with no monthly fee? (5 points) One-year CD Checking Platinum savings Savings QUESTION 12 Which type of credit involves a set limit based on what a consumer pays up front? (5 points) Loans Installment credit Secured credit cards Unsecured credit cards QUESTION 13 Milo has received several credit card offers. Which of the following features is the riskiest? (5 points) High credit limit Fixed interest Low credit limit Variable interest QUESTION 14 02_08_g14.jpg Amun has four credit cards, each with a different interest rate. He charges $1,000 to each card in January and does not pay down any of the cards for four months. Based on the data in the chart, which two cards accrue the most amount of interest over time? (5 points) Credit 1 and Credit 3 Credit 1 and Credit 4 Credit 2 and Credit 3 Credit 2 and Credit 4 QUESTION 15 Samuel needs to decrease his expenses. To which category should he make cuts first? (5 points) Entertainment Housing Transportation Utilities QUESTION 16 Your friend's job pays $5.00 per hour and he works 20 hours per week. His tax rate is 20 percent. Assuming he works 50 weeks of the year, his yearly gross income is (5 points) $1,000 $4,000 $5,000 $10,000 QUESTION 17 02_08_g17_q3.jpg Gillian graphed her expenses in this pie chart to evaluate how she was spending her income. She would like to purchase health insurance, and calculates that it will cost 10 percent of her income for a year to save for the premium. How could she best shift her expenses to save 10 percent? (5 points) Buy a fuel-efficient car Cut household electricity usage Eat out less often Reduce payments on her debt QUESTION 18 Jonah has a high-paying job and would like to start saving for retirement. He has evaluated his budget in order to add savings to his expenses. He has a moderate amount of debt, and he spends a great deal on housing. His utilities, transportation, and health, expenses are fixed, and he spends little on recreation or eating out. Which action is he most likely to take? (5 points) Consider less costly housing options Pay off his debt Reduce his recreation expenses Search for a job with a higher salary QUESTION 19 Location Starting Salary Cost of Living (per person) Moving Costs Baltimore, MD $51,000 $22,000 $1,200 Cincinnati, OH $42,000 $19,000 none Miami, FL $42,000 $22,000 $1,500 New York, NY $49,000 $26,000 $1,300 Constance will graduate within a year with her teaching certification. She has evaluated teaching jobs in four states. A teaching job in which city would result in the most disposable income in the first year? (5 points) Baltimore, MD Cincinnati, OH Miami, FL New York, NY

harlequinprairie-dog550

After analyzing their social securities statements, Charles and Susan are not so sure that their social security benefits will be enough to cover their estimated monthly expenses if they are planning to retire at age 66.
The Smiths are considering opening an IRA account in 2016, after researching the pros and cons of each retirement account; they decided that Roth IRA will fit with their retirement goals. Based on the current IRS regulations, the limit for annual contributions for âMarried filling jointlyâ and Income limit of $183,000 or less is $5,500 for 2016, and $6,500 for people over 50.

Questions:

1. Calculate the total future worth of their Roth IRA account right on their 65th birthday (Normal retirement age) if Charles and Susan will deposit the maximum contribution amount allowed by IRS of $5,500 every year starting at the end of 2016 (age 40) and for the next 9 years (age 49), and then they are planning to increase their contribution to $6,500 for the next ten years (starting age 50) until they are both 65 years old. Assume the couple will not withdraw any money from their IRA during the next 25 years and the Roth IRA account will earn a) 4% and b) 6% per year.

2. The Smithâs forecasted their retirement expenses to be $24,000 starting one year after their retirement age (65 years old). Ignoring any Social Security Benefit. In other words, assuming their $24,000 annual expenses will be funded only with distributions from their Roth IRA (Future worth calculated on question 1). How long will they be able to withdraw $24,000 before exhausting all their IRA funds, assuming a Roth IRA account will earn in average account will earn a) 4% and b) 6% per year?

3. What is the maximum amount of money they can withdraw every year out of the Roth IRA account in order to deplete all the funds by their 85th birthday (use n=20 years in your calculations) Assuming a Roth IRA account will earn in average a) 4% and b)6% per year?

burgundydinosaur227

1-Calculate the present worth of the equipment described in question 4 given a 10% discount rate.

2- An entrepreneur has found a way to turn straw into gold, but he needs $5 million to create the necessary machinery. He wants to earn a 25% rate of return per year and recover the investment in 5 years. How much profit must the machines make every year to accomplish his goal?

3-A designer decides to add an additional generation facility to an existing power plant, which costs $4 million. Given an internal rate of return of 7% over a time span of 20 years, how much extra revenue does the new system provide the power plant each year based on annual compounding?

4-You've won a lottery with two options for receiving your prize. One option is to receive $5 million per year for 40 years with an interest rate of 3%. The other option is to receive $222 million upfront. Ignoring taxes, what will result in you receiving the most money?

5- Your friends want to start a landscaping service for 3 months next summer, but need to buy a truck to haul around your equipment. You found a used one for $5,000, but you can make $1,500 per month. At the end of the summer you have a buyer who will pay $1,000 for the beat up truck (salvage value). Over the 3 months the truck has a discount rate of 2%. Draw a cash flow diagram representing this scenario, then explain how much money this venture will either gain or lose.

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