1 John and Mary C were a middle-aged couple in the midst of planning for their retirement. John was 55 and had decided to put the maximum ammount $2000 into an IRA account for the next ten years. He was planning to retire at 65. The couple felt they they should make arrangements for the following twenty years and not concerned about planning beyond the age of 85. They wanted the funds that accumulated in the IRA to purchase a 20 year annuity. They had one child, whom they wished to leave or give $50,000 when they reached 85.
Based on the investment opportunities available, Larson felt that a 13% interest rate should be used in evaluating their situation. The couple was concerned about how much of an annuity to purchase at retirement that would still leave enough in their investment to grow to $50,000 in twenty years.
2. Ansel and Harriet W were a young highly educated professional couple both employed by one of the leading resort hotels in the area. They were planning on saving for a new house which they expected to purchase in seven years. In addition to that financial retirement, they felt that Harriet would quit working at that time to care for their expected family, and that the loss of her income would make them unable to keep up payments on the house without an annuity to supplement his income.
The couple felt that they needed $1500 a year in supplemental income beginning at the end of the eighth year to assist with the house payments, and that they needed this for each year of the next thirty years. They also wanted to have $50,000 With which to make the down payment in 7 years when they planned to buy the house. As both were working, they had plenty of funds for savings and were wondering how much they should put away at the end of each of the next seven years to be able to make the down payment and buy the annuity. Larson felt that an 11% interest rate applied to their situatution.
2007-08-06
08:11:15
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5 answers
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asked by
Joe P
1
in
Insurance