When dealing with estate taxes they are 1. levied on the value of an estate's assets 2. levied on the value of an estate's liabilities 3. avoided by leaving all of one's assets to one's children 4. avoided by leaving all of one's assets to one's spouse
a. 1 and 3 b. 1 and 4 c. 2 and 3 d. 2 and 4
2. Stock A has a current price of $40.00, a beta of 2.5, and a dividend yield of8%. If the Treasury bill yield is 5% and the market portfolio is expected to return15%, what should stock A sell for at the end of an investor’s three year horizon?
3. Worker A annually invests $1,000 in an IRA for nine years (ages 27 through 35) and nevermakes another contribution. Worker B annually invests $1,000 in an IRA for thirty years(ages 36 through 65). What will each worker have in their retirement account at age 65?
4. What is the present value of a perpetuity that pays you $50,000 a year, with the first payment paid today, the interest rate is 5%?
5. You want to retire at age 65, you begin your investment program at 25 with a one time deposit of $5,000. On this investment you can earn 11% in the Vanguard 2055 retirement fund. At age 35 you come into an inheritance of $15,500 of which you decide to put into a Roth IRA, using a Fidelity index fund which you anticipate will yield 9.5% until 65. At 45 you remember taking Elliott’s class and listening to Bryan Washburn and you realize that you have $14,000 extra saved for retirement. To be super safe you invest this sum in another Roth IRA which you will receive a 7% return. At 65 you want to retire at$120,000 a year for 30 years, (you need this much because you didn’t factor in Inflation, (Elliott was too nice and didn’t want you be depressed) and anticipate you can earn 4.5% on the payout or annuity, not perpetuity. With all of this information, and it is not too much info A.S., how much will you need to invest each year at 10%, beginning at 25 to 65, using a Vanguard mutual fund to achieve your retirement goal of $120,000 for 30 years? The second part: remember Bryan Washburn indicated we are looking for tax-free income at retirement, thus, in a 30% tax bracket, how much will you net each year in retirement?