Question

In: Finance

Please show your work. Having trouble getting to the answer. Anthony Chon, 65, has recently retired....

Please show your work. Having trouble getting to the answer.

Anthony Chon, 65, has recently retired. He estimates that he will require $30,000 in after-tax real dollars per year. He does not expect to live beyond 90 years old. All his investments are in government bonds, expecting to yield a nominal rate of 6% per year. His tax rate is 30%, and the rate of inflation is expected to be 3%. How much money does he need today to support his life style?

Answer: $647,413

Solutions

Expert Solution

  1. you can start the calculation with say amount 100000 and then do.trial and method to see on what amount you get the year 26 result as zero or less
  2. goa.seek.in.excel.can also be used to fasten this process

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