What is the annual amount that louis can spend

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Louis Smith owns a health club in downtown LA. He charges his customers an annual fee of $500 and has an existing customer base of 500. Louis plans to raise the annual fee by 6 percent every year and expects the club membership to grow at a constant rate of 3% for the next 5 years. The overall expenses of running the health club are $75000 a year and are expected to grow at the inflation rate of 2% annually. After 5 years, Louis plans to buy a luxury boat for $500,000, close the health club and travel the world in his boat for the rest of his life. What is the annual amount that Louis can spend while on his world tour if he will have no money left in the bank when he dies? This is assuming that Louis has a remaining life of 25 years and earns 9% on his savings.

Reference no: EM13303329

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