How to Calculate Retirement Funds

To calculate the show value of pastime and principal payments, you de disperse need to use the snooze function, rather than the UP function, since the cash flows in the principal and interest columns atomic number 18 not constant through aside time. What do you observe when you look at these numbers? Explain. (c) Using your amortization table, what Is the principal that remains to be compensable aft(prenominal) you feature completed 15 years of payments? How does this figure come to to the payments that you have already made? How does this figure relate to your remaining payments? Explain. (d) compute that you had bought this tin in June of 2006 under the terms scribed in a higher place.Since that date, the aver come on house has rightd in value at the rate of 1% per month. This is the national average for the 3-year blockage ending summer 2009. Assuming that you also experienced this price decline on your house, at what prime in calendar time will you owe more in pr incipal on the loan than the house is worth? Assume throughout that you make every(prenominal) payment on time and that house prices continue to decline until at least this point in time. Answer the corresponding question if you had paid 30% discomfit Instead of 10%. Explain why your answers are contrastive. E) Now count that your house from part (d) was located In Miami, FL.The average decline in housing prices over this time period in Miami was about 2% per month for the last 4 years. Assume that your houses price declined by the same amount as the average house in the Miami area. How does a 2% decline change your answers to part (d)? Are the answers the same or different? Explain. lower For questions prepare a spreadsheet model for part. Use this spreadsheet model with redundant calculations for part b, c, d, e. Written answers to the questions in b, c, d, and e should be place on a separate worksheet In the same document. 2.Suppose that your salary at age 25 Is $72,500 a nd that you are paid on a periodical basis. You end to retire at age 65 and will need 75% of you last years salary as Income after you retire for living expenses. You have saved $55,000 to date. You want to build your dream home to live out the rest of your look in at age 50. Based on current prices Ana an Notation rate Tanat Is pass judgment to rise at 1% per year Inelegantly, you project this home will cost $1,000,000 to complete. You have or so older relatives that have always had an interest in you and have indicated that you are in their wills. Assume that you will inherit $100,000 in 5 years.Assume that you standardised to travel and plan to take one nice trip every year starting at the end of your first year of retirement until age 75. The average price of the kind of trips you would like to take is $5,000 instantly and will rise with inflation. You project that your salary will sustain at a rate of 2% and that your retirement income needs will grow at 1%. Fin on the wholey, assume that you expect to live to age 85 and that you wish to have a balance at the end of your life that is equal to the present value of 5 years of your needed income. The enchant interest rate for your working life is 9% and declines to 6% after you tire.Both rates of return are nominal. Assume that growth rate and interest rates are quoted as annual figures and reported as EARs. A) What % of your monthly salary do you need to start saving to meet your expected needs? Find the solution to this problem by taking all cash flows to the present (I. E. Age 25) b) Verify that your monthly savings from part a plus your initial savings and inheritance described above will allow you to pay for the house at age 50. NOTE Build a spreadsheet model to answer these two questions and place it in the same document as your answers to questions 1 .