Jeff believes he will need $60,000 annual income during retirement. If he can achieve a 6% return during retirement

Jeff believes he will need $60,000 annual income during retirement. If he can achieve a 6% return during retirement and believes he will live 20 years after retirement, how much does he need to save by the time he retires?

A. $724,055
B. $1,600,000
C. $688,200
D. $209,320

PV_A = A ´PV_IFA (App. D: 6%, 20 periods)
= $60,000 ´ 11.470 = $688,200

 If Allison has saved $1,000,000 upon retirement, how much can she live on each year if she can earn 6% per year and will end with $0 when she expects to die 25 years after retirement?

A. $295,334
B. $20,953
C. $70,952
D. $78,229

A = PVA (App. D: 6%, 25 periods)
PVIFA

Kathy has $50,000 to invest today and would like to determine whether it is realistic for her to achieve her goal of buying a home for $150,000 in 10 years with this investment. What return must she achieve in order to buy her home in 10 years?

A. About 12%
B. About 13%
C. About 9%
D. About 10%

PVIF = PV (App. B: 10 periods)
FV
= $50,000 = 0.82 Return = 12%
$150,000

If Gerry makes a deposit of $1,500 at the end of each quarter for 5 years, how much will he have at the end of the 5 years assuming a 12% annual return and quarterly compounding?

A. $40,305
B. $30,000
C. $108,078
D. $161,220

FV_A = A ´FV_IFA (App. C: 3%, 20 periods)
= $1,500 ´ 26.870 = $40,305