About the retirement goals

Assignment Help Financial Management

Reference no: EM13848169

Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $40 thousand has today (he realizes that the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then get 24 additional annual payments. Inflation is expected to be 5 percent per year from today forward; he currently has $100 thousand saved up; and he expects to earn a return on his savings of 8 percent per year (with annual compounding). To the nearest dollar, how much must he save during each of the next 10 years (with deposits being made at the end of each year) to meet his retirement goals?

Reference no: EM13848169

Questions Cloud

Learning curve-technology improvement-past performance : Past Performance: not correcting for weaknesses in past performance is a major trap. Specifically, what weaknesses should one look at, and try to correct in a new estimate? Learning Curve: How a work force improves its performance over time. Technolo..

Calculate the expected return of portfolio : Calculate the expected return of portfolio

Interest rate parity-what is six-month forward exchange rate : Six-month T-bills have a nominal rate of 4%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 2%. In the spot exchange market, 1 yen equals $0.005. If interest rate parity holds, what is the 6-month forward exchange ra..

Required rate of return-stock worth : The next year the common stock of Silver Corp will pay a dividend of $9.64 per share. If the company is growing at a rate of 4.69 percent per year, and your required rate of return is 10.39 percent, what is Silver company stock worth to you?

About the retirement goals : Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he..

Planning to save for retirement-withdrawal period : You are planning to save for retirement over the next 35 years. To do this, you will invest $870 per month in a stock account and $470 per month in a bond account. The return of the stock account is expected to be 10.7 percent, and the bond account w..

Future value-how much will you have if you make deposits : If you deposit $5,500 at the end of each of the next 15 years into an account paying 11.3 percent interest, how much money will you have in the account in 15 years? How much will you have if you make deposits for 30 years?

What is it about the firms that use low amounts of debt : There are several industries with low percentages of debt financing. Take a look and identify some with a low percentage of debt financing and do the same with firms that have a high percentage of debt financing. Based on the types of firms that use ..

What is the present value of the annuity : A 10-year annuity pays $1,850 per month, and payments are made at the end of each month. If the interest rate is 12 percent compounded monthly for the first five years, and 8 percent compounded monthly thereafter, what is the present value of the ann..

User Account

All Pages