Question
1) A couple will retire in 20 years; they plan to spend about $30 000 per year in retirement, which should last about 15 years.
1) A couple will retire in 20 years; they plan to spend about $30 000 per year in retirement, which should last about 15 years. They believe that they can earn 8% interest on retirement savings. ( 2 points)
a) If they make annual payments into a savings plan, how much will they need to save each year, if the couple realize that in 5 years they will need to spend $40 000 on their child's college education?
2) BMW just paid a $1 per share dividend. You expect the dividend to grow steadily at a rate of 4% per year.
a) If the discount rate fort he stock is 12%, at what price will the stock sell and what is the expected stock price 3 years from now?
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