I am 30 years old. I plan to retire in 50 years. I am self-employed. I save via

Question

I am 30 years old. I plan to retire in 50 years. I am self-employed. I save via an IRA. I save $200 per month. The funds in the IRA are invested in the S&P 500 ETF. The stock symbol for the ETF is SPY. If the ETF appreciates at an average rate of 4% what will be the nominal value of the SPY at your retirement age?

(a) 381,871

(b) 871,243

(c) 324,000

(d) 324,751

2- 401-K retirement plans offer a risk free return on capital that is tax exempt. T

True/False

3- It is not worth buying dividend paying stocks for an IRA since only capital gains accumulate tax free.True False

4- Low nominal yields always imply low real yields. True False

5- . How much will I have to save beginning today if interest is paid at the end of each year and is compounded annually? I plan to save for for 45 years at which time I will retire. My target is to have $2 million dollars by the time I retire. Assume an investment rate of 4% .

.

. a-

. $17,24.91

.

. b-

. $18,232.22

.

. c-

. $22,344.10

.

. d-

. $16,524.91

6-. You are 25 years old. You plan to work for another 45 years. You are in the 25% tax bracket. Your current salary is $45,000 and you expect it to increase by 5% per year until you retire. You are going to deposit 5% of your salary each year in a 401-K plan that invests in the Standard and Poors 500 ETF that has the ticker SPY. You begin at the end of year 1 or one year from now. You expect the SPY to have an average annual yield of 12% over the next 45 years. You can expect your wealth to be ??? when you are ready to retire.

. $2.2million

. $8.2million

. $45 million

. $7.29million

PLEASE PLEASE DO NOT GUESS BECAUSE I ONLY HAVE ONE CHANGE TO GET THEM RIGHT. SO PLEASE DONT GUESS JUST FOR THE RATING AND STUFF.

.

. a-

. $17,24.91

.

. b-

. $18,232.22

.

. c-

. $22,344.10

.

. d-

. $16,524.91

Explanation / Answer

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