You want to be able to spend the current equivalent of $58,077 per year during your...

You want to be able to spend the current equivalent of $58,077 per year during your retirement that will start in 17 years, and go for 27 years. You expect inflation to be 4% per year during your retirement. How much would you have to invest in nominal terms in years 1 to 7, to fully pay for your retirement if your investments earn 7.46% APR (annual compounding).

Solutions

Expert Solution

1. Equivalent amount at retiremernt of $ 58077 with inflation 4% is

= 113128.22

2. Now calculate the Accumulated balance needed. here in retirement question we assume that 1st withdrawl at beginning of year.In calculator On the BGN mode and put values in TVM as N=27, I/Y= 7.46, PMT = 113128.22 and FV =0 Compute PV = 1299110.12

3. You need to invest from 1 to 7 years annualy and then 8 to 17 year that lumpsum will get compunding. Firstly bring back the 1299110.12 year at the end of year 7.

= 632670.53 is the amount which must be accumulated by him by saving 1 to 7 years .

3. Now we need to calculate monthly saving needed. Put values in TVM in your financial calculator:

N=7,I/Y = 7.46, PV=0, FV= 632670.53 Compute PMT = 72086.24

$72086.24 need to save annualy for 7 years for annual withdrawl of 113128.22 annualy after retirement for 27 years.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

You want to be able to spend the current equivalent of $65,993per year during your...

You want to be able to spend the current equivalent of $65,993 per year during your retirement that will start in 12 years, and go for 29 years.You expect inflation to be 4% per year during your retirement.How much would you have to invest in nominal terms in years 1 to 10, to fully pay for your retirement if your investments earn 7.67% APR (annual compounding)

You want to be able to spend the current equivalent of $57,168 per year during your retirement that will start in 17 years

You want to be able to spend the current equivalent of $57,168 per year during your retirement that will start in 17 years, and go for 22 years.You expect inflation to be 4% per year during your retirement.How much would you have to invest in nominal terms in years 1 to 7, to fully pay for your retirement if your investments earn 8.44% APR (annual compounding)

You have received $100 from your parents to spend, but they want you to spend equal...

You have received $100 from your parents to spend, but they want you to spend equal amounts of it (labeled X) at the start of the next month (time period or t1) and at the start of the second month (t2). How much money can you spend each time (X)? Assume a monthly interest rate of 10%. HINT:- Use the compound interest formulae to spell out the relation between X occurring at t1 and t2 and some P1 and some...

You want to be able to withdraw $45000 each year for 15 years. Your account earns...

You want to be able to withdraw $45000 each year for 15 years. Your account earns 4% interest. How much do you need in your account at the beginning?

You want to be able to withdraw $30,000 each year for 20 years. Your account earns...

You want to be able to withdraw $30,000 each year for 20 years. Your account earns 8% interest. a) How much do you need in your account at the beginning? $ b) How much total money will you pull out of the account? $ c) How much of that money is interest? $

You want to be able to withdraw $40,000 from your account each year for 15 years...

You want to be able to withdraw $40,000 from your account each year for 15 years after you retire. If you expect to retire in 25 years and your account earns 7.6% interest while saving for retirement and 6.9% interest while retired: Round your answers to the nearest cent as needed. a) How much will you need to have when you retire? $ b) How much will you need to deposit each month until retirement to achieve your retirement goals?...

You want to be able to withdraw $45,000 from your account each year for 30 years...

You want to be able to withdraw $45,000 from your account each year for 30 years after you retire. If you expect to retire in 25 years and your account earns 7.9% interest while saving for retirement and 7.8% interest while retired: Round your answers to the nearest cent as needed. a) How much will you need to have when you retire? $ b) How much will you need to deposit each month until retirement to achieve your retirement goals?...

You want to be able to withdraw $50,000 from your account each year for 20 years...

You want to be able to withdraw $50,000 from your account each year for 20 years after you retire. If you expect to retire in 30 years and your account earns 5% interest while saving for retirement and 4.1% interest while retired: Round your answers to the nearest cent as needed. a) How much will you need to have when you retire? $ b) How much will you need to deposit each month until retirement to achieve your retirement goals?...

20. You want to be able to withdraw $25,000 from your account each year for 30...

20. You want to be able to withdraw $25,000 from your account each year for 30 years after you retire. If you expect to retire in 15 years and your account earns 7.4% interest while saving for retirement and 5.3% interest while retired: Round your answers to the nearest cent as needed. a) How much will you need to have when you retire? $ b) How much will you need to deposit each month until retirement to achieve your retirement...

You want to be able to withdraw $20,000 from your account each year for 15 years...

You want to be able to withdraw $20,000 from your account each year for 15 years after you retire. You expect to retire in 30 years. If your account earns 9% interest, how much will you need to deposit each year until retirement to achieve your retirement goals? $ __________________________ Round your answer to the nearest cent.

Subjects