A friend wants to retire in 30 years when he is 65. At age 35, he...

A friend wants to retire in 30 years when he is 65. At age 35, he can invest $500/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $1,500/month to catch up, earning the same 6% per year. He feels that by investing over twice as much for half as many years (15 instead of 30 years) he will have more.

A. What is the future value of each of these options at age 65, and under which scenario would he accumulate more money?

Scenario A: $ , Scenario B: $ , Best:

B. He is now retiring at age 65, and has saved $500,000. He wants the money to last until he turns age 100. He continues to earn 6%. How much can he spend each month to spend his final dollar at age 100?

Monthly Amount $

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jeff jeffy answered 7 months ago

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