Save money to meet three objectives

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Reference no: EM132024294

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $20,000 per month for 25 years, with the first payment received 30 years. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $375,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $2,00,000 to his nephew Frodo. He can afford to save $2,500 per month for the next 10 years. If he can earn a 9.57 percent EAR before he retires and a 6.78 percent EAR after he retires, how much will he have to save each month in Years 11 through 30?

Reference no: EM132024294

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