a. According to the rule of 72, how many times your money will be doubled over a 36- year period if it earns a rate of return of 8% per year? b. Using the rule of 72, estimate the value of an initial investment of $100K at the end of a 36-year period if it earns a rate of return of 8% per year? c. According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K? d. Referring to part c, what will be your 3 rd annual withdrawal amount if the inflation rate during the 2 years since your initial withdrawal averaged 2% per year? Show your work.
a. According to the rule of 72, how many times your money will be doubled over a 36- year period if it earns a rate of return of 8% per year? b. Using the rule of 72, estimate the value of an initial investment of $100K at the end of a 36-year period if it earns a rate of return of 8% per year? c. According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K? d. Referring to part c, what will be your 3 rd annual withdrawal amount if the inflation rate during the 2 years since your initial withdrawal averaged 2% per year? Show your work.
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. According to the rule of 72, how many times your money will be doubled over a 36- year period if it earns a
b. Using the rule of 72, estimate the value of an initial investment of $100K at the end of a 36-year period if it earns a rate of return of 8% per year?
c. According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K?
d. Referring to part c, what will be your 3 rd annual withdrawal amount if the inflation rate during the 2 years since your initial withdrawal averaged 2% per year? Show your work.
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