Question
2). Suppose that you were to receive a $30,000 gift upon graduation from your master's degree program, when you turn 31 years old. At the
2). Suppose that you were to receive a $30,000 gift upon graduation from your master's degree program, when you turn 31 years old. At the end of each working year for 34 years, you put an additional $5,000 into an IRA.
2a). Assuming you earn an annual compounded rate of 7.5% on the gift and the IRA investments, how much would be available when you retire at age 65?
2b). If you hope to draw money out of that investment at the end of every month for 30 years following retirement, how much could you withdraw each month? Assume that during the years you are retired the money earns an annual rate of 6% compounded monthly.
2c). You realize that if you draw out that amount each month there will be nothing left for your two children. You decide that you want to leave $250,000 to each of your children 30 years after you retire. How much would you have to invest at your retirement to fund your children's inheritance? Assume that you will earn 7.5% compounded annually on the money invested for your children.
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