Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Assume that Tom and Barb from Question 6 will need a lump - sum retirement fund of $ 5 million; their assets will amount to
Assume that Tom and Barb from Question will need a lumpsum retirement fund of $ million; their assets will amount to $ million at the first retirement year, leaving $ million to be saved over the preretirement period. Use the worksheet below to calculate Tom and Barb's annual serial increasing savings requirement. Determine the deflated value of the additional savings needed at retirement in today's dollars: $ Additional savings need at retirement Number of periods until retirement Inflation rate Deflated value of additional savings need at retirement $ Determine the amount that Tom and Barb need to save at the end of the first current year. This amount is increased each year during the preretirement period at the inflation rate. $ Deflated value of additional savings need at retirement from used as the future value to calculate the first serial increasing savings payment Number of periods until retirement Inflationadjusted yield using: aftertax return inflation rate Formula: d i r X Calculate the first aftertax serial increasing savings payment before adjustment for inflation: $ Inflation adjustment: First year unadjusted serial savings required from : Inflation rate: FIRST YEAR SERIAL INCREASING SAVINGS AMOUNT ADJUSTED FOR INFLATION: $ Tom and Barb's first endofyear savings payment, adjusted for inflation, is:
Assume that Tom and Barb from Question will need a lumpsum retirement fund of $ million; their assets will amount to $ million at the first retirement year, leaving $ million to be saved over the preretirement period. Use the worksheet below to calculate Tom and Barb's annual serial increasing savings requirement.
Determine the deflated value of the additional savings needed at retirement in today's dollars:
$ Additional savings need at retirement
Number of periods until retirement
Inflation rate
Deflated value of additional savings need at retirement $
Determine the amount that Tom and Barb need to save at the end of the first current year. This amount is increased each year during the preretirement period at the inflation rate.
$ Deflated value of additional savings need at retirement from
used as the future value to calculate the first serial increasing savings payment
Number of periods until retirement
Inflationadjusted yield using:
aftertax return
inflation rate
Formula: d i r X
Calculate the first aftertax serial increasing savings payment before adjustment for inflation:
$
Inflation adjustment:
First year unadjusted serial savings required from :
Inflation rate:
FIRST YEAR SERIAL INCREASING SAVINGS AMOUNT ADJUSTED FOR INFLATION: $
Tom and Barb's first endofyear savings payment, adjusted for inflation, is:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started