Required Retirement Income per Month = $ 29000, Cabin Purchase Expense = $ 370000 at the end of Year 10, Target Inheritance = $ 1250000 at the end of 20 years post-retirement, Retirement Tenure = 20 years or 240 months
Post-Retirement EAR = 7% and Pre-Retirement = 10 %
Applicable Post-Retirement Monthly Rate = 7/12 = 0.5833 % and Applicable Pre-Retirement Monthly Rate = 10/12 = 0.8333 %
If current time is assumed to be t=0, then Value of Retirement Income at the end of Year 30 = 29000 x (1/0.005833) x [1-{1/(1.005833)^(240)}] = $ 3740608.53
Value of Cabin Purchase Expense at the end of Year 30 = 370000 x (1.1)^(20) = $ 2489174.98
Value of Inheritance at the end of Year 30 = 1250000 / (1.07)^(20) = $ 323023.75
Total Expense Value at the end of Year 30 = 3740608.53 + 2489174.98 + 323023.75 = $ 6552807.265
Deposits between Year 1 and Year 10 Per Month = $ 3100
Value of Initial Deposits at the end of Year 30 = [3100 x (1.008333)^(119) + .............+ 3100] x (1.1)^(20) = $ 4271995.35
Let the required monthly deposits be $ k
Value of Deposits between Year 11 and Year 30 at the end of Year 30 = k x (1.008333)^(239) + .............+ k = [{(1.008333)^(240)-1}/{(1.008333)-1}] x k = k x 759.329
k x 759.329 + 4271995.35 = 6552807.265
k = (6552807.265 - 4271995.35) / 759.329 = $ 3003.718 ~ $ 3003.72
Please show work. Thank you Return to question Problem 4-59 Calculating Annuity Values points Bilbo Baggins wants to...
Problem 4-59 Calculating Annuity Values Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $29,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $370,000. Third, after he passes on at the end of the...
Problem 4-59 Calculating Annuity Values Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $26,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $340,000. Third, after he passes on at the end of the...
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $26,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $288,000. Third, after he passes on at the end of the 20 years of withdrawals, he would...
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Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $28,000 per month for 30 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 20 years at an estimated cost of $1,239,000. Third, after he passes on at the end of the 30 years of withdrawals, he would...
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View History Bookmarks People Window Help My Pitt Home , Chapter 6 Assignment 、G what is The Value Toda O Rental Listings I ocLI x × > С https://newconnect.mh educat nect html Chapter 6 Assignment Saved Hel Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in...