Questions:- John wishes to create his own life annuity plan. He expects to retire at age 60. He plans to deposit a fixed amount of money in a retirement account each year starting from age 30. Assume...


Questions:-<br>John wishes to create his own life annuity plan. He expects to retire at<br>age 60. He plans to deposit a fixed amount of money in a retirement<br>account each year starting from age 30. Assume all amounts are<br>deposited or withdrawn at the end of the year. Suppose the account<br>can earn an annual rate of 5%.<br>1.<br>(a) If John wants to withdraw $120,000 each year starting from age 60<br>for the next 20 years, calculate the amount that should be<br>accumulated in the retirement account at age 60.<br>(7%)<br>(b) Calculate the fixed amount of money that John requires to deposit per<br>year for 30 years, starting from age 30 to accumulate the amount (8%)<br>calculated in part (a).<br>(c)<br>In the past 5 years, Industrial and Commercial Bank of China (ICBC)<br>has offered a stable dividend distribution of HK$0.26 per share each<br>year. What is the annual rate of return of this investment if you can (5%)<br>buy ICBC share at $5.2 in the market?<br>(d) John wishes to invest in shares to create his life annuity plan. What<br>are the potential risks of this method to provide a steady income?<br>(5%)<br>

Extracted text: Questions:- John wishes to create his own life annuity plan. He expects to retire at age 60. He plans to deposit a fixed amount of money in a retirement account each year starting from age 30. Assume all amounts are deposited or withdrawn at the end of the year. Suppose the account can earn an annual rate of 5%. 1. (a) If John wants to withdraw $120,000 each year starting from age 60 for the next 20 years, calculate the amount that should be accumulated in the retirement account at age 60. (7%) (b) Calculate the fixed amount of money that John requires to deposit per year for 30 years, starting from age 30 to accumulate the amount (8%) calculated in part (a). (c) In the past 5 years, Industrial and Commercial Bank of China (ICBC) has offered a stable dividend distribution of HK$0.26 per share each year. What is the annual rate of return of this investment if you can (5%) buy ICBC share at $5.2 in the market? (d) John wishes to invest in shares to create his life annuity plan. What are the potential risks of this method to provide a steady income? (5%)

Jun 07, 2022
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