George is currently at the age of 31 (he has just had his birthday) with monthly income of $80,000. He is going to buy a house at $3,200,000 After buying the apartment, George discusses with a financial planner regarding his retirement planning. Here's the information he gives to the financial planner: A" He will sponsor his daughter $5,000,000 to buy an apartment on his 61* birthdays . He wants to retire on his 65th birthday and estimates that he needs $100,000 monthly to support his living after retirement, with the first withdrawal one month after his retirement and the last withdrawal one month before his 90th birthday $100,000 annually (last forever) starting from his 70h birthday 65th birthday in celebration of his retirement. CHe wants to set up a trust fund for his university to award a scholarship of D- He wants to withdraw an additional $3,000,000 for a round-the-world trip on his E. He wants to leave $50,000,000 to his wife on his 90th birthday. The financial planner recommends George to open an investment account that earnsa return of 3.0301% per quarter (EOR), George will be required to make quarterly deposits starting from one quarter after his 31st birthday until his 65th birthday (inclusive). He could then transfer all his money to a safe account that earns an effective monthly rate of 0.4074% (= EAR of 500) In addition, he plans to sell his apartment on his 61st birthday, and then deposit all the sale proceeds after the deduction of the sponsorship to his daughter to the investment account. He assumes that the market price of his apartment will grow at an average rate of 3% per year. Required: (a) If George makes a quarterly deposit of S15,000 to the investment account, does George have enough money to fulfill his retirement plan? Show your calculations (30 marks) Hints: Calculate how much George needs at retirement first] If George will not have enough money to fulfill his retirement plan from (a), suggest ONE change that George would make to bring the goal closer to reality. Explain you (10 marks) (b) answer with suitable calculations. change plan 1:10 (C), depost George is currently at the age of 31 (he has just had his birthday) with monthly income of $80,000. He is going to buy a house at $3,200,000 After buying the apartment, George discusses with a financial planner regarding his retirement planning. Here's the information he gives to the financial planner: A" He will sponsor his daughter $5,000,000 to buy an apartment on his 61* birthdays . He wants to retire on his 65th birthday and estimates that he needs $100,000 monthly to support his living after retirement, with the first withdrawal one month after his retirement and the last withdrawal one month before his 90th birthday $100,000 annually (last forever) starting from his 70h birthday 65th birthday in celebration of his retirement. CHe wants to set up a trust fund for his university to award a scholarship of D- He wants to withdraw an additional $3,000,000 for a round-the-world trip on his E. He wants to leave $50,000,000 to his wife on his 90th birthday. The financial planner recommends George to open an investment account that earnsa return of 3.0301% per quarter (EOR), George will be required to make quarterly deposits starting from one quarter after his 31st birthday until his 65th birthday (inclusive). He could then transfer all his money to a safe account that earns an effective monthly rate of 0.4074% (= EAR of 500) In addition, he plans to sell his apartment on his 61st birthday, and then deposit all the sale proceeds after the deduction of the sponsorship to his daughter to the investment account. He assumes that the market price of his apartment will grow at an average rate of 3% per year. Required: (a) If George makes a quarterly deposit of S15,000 to the investment account, does George have enough money to fulfill his retirement plan? Show your calculations (30 marks) Hints: Calculate how much George needs at retirement first] If George will not have enough money to fulfill his retirement plan from (a), suggest ONE change that George would make to bring the goal closer to reality. Explain you (10 marks) (b) answer with suitable calculations. change plan 1:10 (C), depost
