a) What is the nominal value of the retirement fund the couple must have by the time they retire in 30 years to make it possible? b) How much do they need to save in nominal terms each year to create the retirement fund in part a)? c) If the couple successfully achieve their goal, what will be their nominal expenditures in the last year of retirement (year 50)?
a) What is the nominal value of the retirement fund the couple must have by the time they retire in 30 years to make it possible? b) How much do they need to save in nominal terms each year to create the retirement fund in part a)? c) If the couple successfully achieve their goal, what will be their nominal expenditures in the last year of retirement (year 50)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A couple will retire in 30 years: they plan to spend about $30,000 a year (in real value) in retirement, which should last about 20 years. They believe that they can earn 6% nominal return on retirement portfolio account. The inflation rate over the next 50 years is expected to average 2%.
a) What is the nominal value of the retirement fund the couple must have by the time they retire in 30 years to make it possible?
b) How much do they need to save in nominal terms each year to create the retirement fund in part a)?
c) If the couple successfully achieve their goal, what will be their nominal expenditures in the last year of retirement (year 50)?
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