IT technology
When Yvonne was twelve, her grandfather gave her $5,000 to be used for college. Yvonne was a good student and dreamed of going to a good school so she invested the gift in a 10-year bank CD earning 7¼%. She received a generous scholarship and never needed to use the money from her grandfather. After graduating from college at age 22, she began working at a great job. Knowing the value of early investing, she began saving for retirement right away. When the CD matured she put it into an investment account earning 6¾ % and made an additional annual investment of $1,500 every January 1st . She also opened an IRA account and put $2,000 into it every year on January 1st and over the years it earned a steady 7%. Now Yvonne is 45 and thinking she’d like to retire early at age 55. At age 65 she’ll get an extremely generous corporate pension, which along with Social Security payments will allow her to live very well indeed. She believes that with clever investing strategies both of her accounts will be able to earn 8%. She plans to continue making the same annual contributions to her accounts until retirement. What Yvonne wants to know is whether her retirement savings will be able to provide enough income each year to allow her to live comfortably until age 65 when the pension kicks in. 1. How much was the CD worth when she transferred it into that investment account? 2. How much is the investment account worth now? 3. How much is the IRA account worth now? 4. How much will she have accumulated when she takes early retirement? 5. How much will she be able to withdraw each January 1st if she takes early retirement?
