Personal Financial Planning 13th Edition by Lawrence Gitman,Michael Joehnk,Randy Billingsley

Exercise 25

Use future or present value techniques to solve the following problems.
a. Starting with $15,000, how much will you have in 10 years if you can earn 6 percent on your money If you can earn only 4 percent
b. If you inherited $45,000 today and invested all of it in a security that paid a 7 percent rate of return, how much would you have in 25 years
c. If the average new home costs $275,000 today, how much will it cost in 10 years if the price increases by 5 percent each year
d. You think that in 15 years, it will cost $212,000 to provide your child with a 4-year college education. Will you have enough if you take $70,000 today and invest it for the next 15 years at 5 percent If you start from scratch, how much will you have to save each year to have $212,000 in 15 years if you can earn a 4 percent rate of return on your investments
e. If you can earn 4 percent, how much will you have to save each year if you want to retire in 35 years with $1 million
f. You plan to have $750,000 in savings and investments when you retire at age 60. Assuming that you earn an average of 8 percent on this portfolio, what is the maximum annual withdrawal you can make over a 25-year period of retirement