Fank age 28 wants to calculate his resources in real

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Frank, age 28, wants to calculate his resources in real (inflation-adjusted) terms. Calculate the amount of resources made available by age 65 retirement if $18,000 a year is saved. Assume that outflows from ages 65 to 90 are at the rate of $27,000 a year. The projected inflation rate is 4 percent, and the anticipated investment return is 6 percent.

a. How much in new savings will Frank have available at age 65 before subsequent withdrawals?

b. How much will he have left at age 90?

c. What is the present value of that sum at age 65?

d. How much will he have to save per year to exactly meet his need?

Reference no: EM13571269

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