Computing the monthly savings

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Reference no: EM131945740

Question: Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $31,500 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $395,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $875,000 to his nephew Frodo. He can afford to save $3,600 per month for the next 10 years. If he can earn a EAR of 10 percent before he retires and a EAR of 7 percent EAR after he retires, how much will he have to save each month in years 11 through 30? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Please answer the monthly savings.

Reference no: EM131945740

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