Question
Michael and Fiona will retire in a few years. At that time, in addition to their social security retirement income, they would like to receive
Michael and Fiona will retire in a few years. At that time, in addition to their social security retirement income, they
would like to receive $40,000 (today's dollars) per year from their portfolio at the beginning of each year. They assume
inflation will be 4% and that they can make an 8% return on their investments. They want to calculate their need based
on a 30 year life expectancy after retirement. How much will they need to have in their retirement fund at retirement in
order to achieve their goal?
Select one:
a. $731,894.20
b. Cannot determine since their ages are not provided.
c. $698,457.24
d. $813,529.88
e. $728,299.37
Please show your work using TVM concepts.
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