What is the real annual savings the couple must set aside? Assume they will discontinue saving when th /retire. How much do they need to save in nominal terms in the first vear?
What is the real annual savings the couple must set aside? Assume they will discontinue saving when th /retire. How much do they need to save in nominal terms in the first vear?
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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Transcribed Image Text:A couple will retire in 50 years; they plan to spend about $30,000 a year (in current dollars) in retirement vhich should last about 25
years. They believe that they can earn 8% interest on retirement savings. The inflation rate over the next years is expected to
average 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
a. What is the real annual savings the couple must set aside? Assume they will discontinue saving when th /retire.
b. How much do they need to save in nominal terms in the first year?
c. How much do they need to save in nominal terms in the last year?
d. What will be their nominal expenditures in the first year of retirement?
e. What will be their nominal expenditures in the last year of retirement?
Real annual savings
a.
b.
Nominal savings in first year
C.
Nominal savings in last year
d.
Nominal expenditures in first year of retirement
е.
Nominal expenditures in last year of retirement
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