TIME VALUE OF MONEY CAL Mary and Leroy plan to retire at age 60 with a retirement income of $48,000 a year from their savings. Rather than pay themselves the whole amount at the beginning of each year, they have decided that payment at the beginning of each quarter of $12,000 gives them the right balance of flexibility and maximized interest earnings. They feel they can safely earn an interest rate of 7.5%, compounded quarterly, on their money and they are budgeting based on the prediction that they will live until they are 90 years old. How much money will they have to have saved by the time they are 60 in order to reach their retirement goal? If they do live the full 30 years, and spend their full quarterly budget, how much money in total will they have lived on/spent in their retirement? How much will have been earned in interest?
Mary and Leroy plan to retire at age 60 with a retirement income of $48,000 a year from their savings. Rather than pay themselves the whole amount at the beginning of each year, they have decided that payment at the beginning of each quarter of $12,000 gives them the right balance of flexibility and maximized interest earnings. They feel they can safely earn an interest rate of 7.5%, compounded quarterly, on their money and they are budgeting based on the prediction that they will live until they are 90 years old.
How much money will they have to have saved by the time they are 60 in order to reach their retirement goal? If they do live the full 30 years, and spend their full quarterly budget, how much money in total will they have lived on/spent in their retirement?
How much will have been earned in interest?
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