Question
3.You plan to retire in 40 years. Upon retirement, you plan to spend US$40,000.00 per year for 30 years. a.At a discount rate of 7.00%
3.You plan to retire in 40 years. Upon retirement, you plan to spend US$40,000.00 per year for 30 years. a.At a discount rate of 7.00% per year, how much do you need to have saved up in 40 years if you are to meet up with your retirement objectives? b.Using the answer to part (a) and a compound rate of 8.00%, how much would you have to save yearly for the next 40 years if you are to meet up with your retirement objective?c.Suppose you seek to spend US$40,000.00 per year for 30 years during retirement in real purchasing power terms, as opposed to nominal purchasing power. Suppose inflation equals 3% per year; how do your answers to parts (a) and (b) alter - number answers to follow, parts (c) and (d). 4.Redo all of Question 3 - under the assumption that you plan to spend US$40,000.00 per year forever, as opposed to for 30 years. What do the differences in the answers suggest?
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