Kevin and Jennifer are ready to retire. They want to receive the equivalent of $40,000 in today's dollars at the beginning of each year for the next 50 years. They assume inflation will average 3% over the long run, and they can earn 9% (compounded annually) on their investments. What lump sum do they need to invest today to attain their goal?
Kevin and Jennifer are ready to retire. They want to receive the equivalent of $40,000 in today's dollars at the beginning of each year for the next 50 years. They assume inflation will average 3% over the long run, and they can earn 9% (compounded annually) on their investments. What lump sum do they need to invest today to attain their goal?
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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Kevin and Jennifer are ready to retire. They want to receive the equivalent of $40,000 in today's dollars at the beginning of each year for the next 50 years. They assume inflation will average 3% over the long run, and they can earn 9% (compounded annually) on their investments. What lump sum do they need to invest today to attain their goal?
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