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 20 years at an estimated cost of $1,358,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $900,000 to his nephew Frodo. He can afford to save $2,100 per month for the next 20 years.

Required:

If he can earn an 11 percent EAR before he retires and a 9 percent EAR after he retires, how much will he have to save each month in years 21 through 30?

$11,876.51

$14,845.79

$12,114.04

$11,638.98

$14,397.46