Save money to meet three objectives

Assignment Help Financial Management

Reference no: EM13987964

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 $27,000 per month for 25 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 $370,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1,650,000 to his nephew Frodo. He can afford to save $3,100 per month for the next 10 years. If he can earn a 10 percent EAR before he retires and a 7 percent EAR after he retires, how much will he have to save each month in years 11 through 30?

Reference no: EM13987964

Questions Cloud

What wavelength of light coming from second monochromatic : If the 11th order bright fringe from the first light source coincides with the 14th order bright fringe from the second light source, what is the wavelength of the light coming from the second monochromatic light source?

Paper - antibullying programs reviewed : Social Psychology Paper - five antibullying programs reviewed.

What was the amount of the deposit at the end of year : You put $9,000 in an account earning 7%. After 3 years, you make another deposit into the same account. Five years later (that is, 8 years after your original $9,000 deposit), the account balance is $23,000. What was the amount of the deposit at the ..

Examine impact of ariel birthday present on her marriage : Within Andrea Lee's "The Birthday Present" multiple levels exist as to the true meaning and impact of the birthday present. For your 300 word analysis, examine the impact of Ariel's birthday present on her marriage

Save money to meet three objectives : 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 $27,000 per month for 25 years, with the first payment received 30 years and 1 month from now. He can af..

How long will it take to pay off the mortgage : You decide to take a 30 year mortgage of $150,000 offered by the bank of Montreal. Instead of making the monthly payment of $957.68 every month, you can make half the payment every two weeks ( so that you will make 52/2=26 payments a year). How long ..

What is the outstanding balance : Your mortgage has 25 years left, and has an APR of 6.324% (with semianual compounding) with monthly payments of 1500. what is the outstanding balance. suppose you cannot make the mortgage payment and you are in danger of losing your house to forclosu..

Outline an employee payroll strategy : Income for the firm depends on the number and size of contracts for the year. Knowing that the cash flow into the company may vary, how should employees be paid? Outline an employee payroll strategy using the information in the story.

What is the rate earned on stockholders equity : If net income is $130,000 and interest expense is $40,000 for 2011, what is the rate earned on stockholders' equity for 2011 (rounded to one decimal place)?

User Account

All Pages