How much does bart need to set aside in real terms

Assignment Help Financial Management

Reference no: EM132028542

Knowledge of Mr. Homer’s retirement expertise has spread. Now his friend, Bart, has asked for help with his retirement planning. Bart, who turned 21 years old today, is just starting his first full time job and has nothing set aside in his retirement account. He plans to add an equal amount in real terms at the end of each of the next 46 years so that he can retire at age 67. His goal is to build a retirement account that will enable him to make 30 annual withdraws with a purchasing power of $60,000 (at today’s prices) on his 68th through 97th birthdays. His retirement account is expected to earn 7.00% per year and the expected inflation rate is 2.00% per year. How much does Bart need to set aside in real terms at the end of each of the next 46 years to meet his retirement goal?

Round your answer to the nearest penny.

Reference no: EM132028542

Questions Cloud

What are projected dividends for the company : Your forecast of net income for Lockheed Martin for 2017 is $5,504 million. What are projected dividends for the company for 2017?

Management discussion analysis : Management Discussion Analysis, Notes to the Financial Statements, Auditor Report, or not disclosed?

What was the capital gains yield : Compute the percentage total return. What was the capital gains yield?

What was the standard deviation of returns over this period : What was the arithmetic average return on the stock over this five-year period? What was the standard deviation of the returns over this period?

How much does bart need to set aside in real terms : How much does Bart need to set aside in real terms at the end of each of the next 46 years to meet his retirement goal?

What was average real risk premium : What was the average real risk-free rate over this time period? What was the average real risk premium?

What is the firm cost of equity : The required return on the firm’s assets is 11.1% and the pre-tax cost of debt is 4.1%. Ignore taxes. What is the firm’s cost of equity?

Rates of return on knowlode mutual fund and market portfolio : Suppose that the correlation coefficient between the rates of return on Knowlode Mutual Fund and the market portfolio is 0.7.

Outlay for the machine for capital budgeting purposes : What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow?

User Account

All Pages