Professional Documents
Culture Documents
Submitted to:
Felix D. Cena, CPA, PhD
Submitted by:
GROUP 1
Kevin Camato
Hanah Feria
Dorothy Gatoc
Jacob Jereza
RG Lucero
Janice Tanongtanong
PV=C/(1+r)n PV x 11%
Based on the table above, Ryan’s starting salary was $54,846.83. If he had contributed
voluntarily on the savings plan on his first year of employment, he could have already contributed
$6,033.
2. Had Ryan taken advantage of the company’s voluntary retirement plan up to the
maximum, every year for the past five years, how much money would he currently have
accumulated in his retirement account, assuming a nominal rate of return of 7%? How much
more would his investment value have been worth had he opted for a higher risk alternative
(i.e. 100% in common stocks), which was expected to yield an average compound rate of return
of 12% (A.P.R.)?
had opted to contribute on their voluntary retirement plan since his first year of work. If he had
been more aggressive, his savings with a higher return of 12% is $76,234.17. The difference of
$7,225.30 is the product of higher return rate. A higher rate means a higher return and a higher
risk.
3. If Ryan starts his retirement savings plan from January of next year by contributing the
maximum allowable amount into the firm’s voluntary retirement savings program, how much
money will he have accumulated for retirement, assuming he retires at age 65? Assume that
the rate of return on the account is 7% per year, compounded monthly and that the maximum
Retirement Age 65
Current Age 27
Years of investment 38
4. How much would Ryan have to save each month, starting from the end of the next
month, in order to accumulate enough money for his wedding expenses, assuming that his
Rate of return 7%
Period 12 months
Since the value of the money now will be different next year, the %15,000 of Ryan today will
be %16,050 next year. With that, he needs to save $1,295.13 every month for the whole year for
5. If Ryan starts saving immediately for the 20% down payment on his house, how much
additional money will he have to save each month? Assume an investment rate return of 7%
per year.
Rate of return 7%
5 years
Term
Monthly
Ryan would have to save $973.82 monthly in a span of 5 years in order to pay the 20%
6. If Ryan wants to have a million dollars (in terms of today’s dollars) when he retires at
age 65, how much should he save in equal monthly deposits from the end of the next month?
Ignore the cost of the wedding and the down payment on the house. Assume his savings earn
Retirement Age 65
Current Age 27
Years of investment 38
Years of investment 38
x No. of periods per year 12
Total no. of payments 456
Rate of return 7%
7. If Ryan saves up the million dollars (in terms of today’s dollars) by the time of his
retirement at age 65, how much can he withdraw each month (beginning one month after his
retirement) in equal dollar amounts, if he figures he will live up to the age of 85 years? Assume
that his investment fund yields a nominal rate of return of 7% per year.
Final age 85
Retirement age 65
Period, in years 20
x No. of months per year 12
Total no. of periods 240
Rate of return, annual 7.0%
PV amount 1,000,000.00
PV factor, ordinary annuity 128.9825
Monthly withdrawal 7,752.99
If Ryan is now retired, he would be able to withdraw from his savings an amount of
8. After preparing a detailed budget, Ryan estimates that the maximum he will be able to
save for retirement is $300 per month, for the first five years. After that he is confident that he
will be able to increase the monthly saving to $500 per month until retirement. If the account
provides a nominal annual return of 7%, how much money will Ryan be able to withdraw per
on the 6th year until his retirement, he would need Ryan would be able to withdraw $8651.79
The value of money changes every time. Your money now will not be of the same value
tomorrow. With that, you must learn to save for a retirement plan as early as possible. By the
time you retire, your investment or savings can increase immensely, allowing not only you but
also the rest of your family to be able to live comfortably while retired. Retirement is one of the
most important life events. It’s an achievement of a life full of sweat and tears. From both a