NPV and annuities: how much must be saved to plan for retirement
Not what you're looking for?
Assume that you are planning on how much you need to save for retirement. You expect to live for 30 years in retirement and would like to spend $100,000 (in real terms) per year, while leaving a $1,000,000 bequest to the International Red Cross. You are 35 years away from retirement. How much do you need to save at the end of each year if you earn 5% real (i.e., after inflation) during your working years and 3% during your retirement years?
** Solve the problem in 2 different ways: by using a spreadsheet; by using the formulas for the present value of an annuity and for a loan payment.**
Purchase this Solution
Solution Summary
The solution shows all the calculations to arrive at the correct answer in two formats. How much must be saved to plan for retirement is determined.
Solution Preview
See the attached files.
First calculate the value of money required at the end of 35 years to sustain the expenditure after retirement.
We have two streams of cash flow. One is annuity of $100,000 every year with discount rate of 3%. One time payment of $1000,000.
Value of ...
Purchase this Solution
Free BrainMass Quizzes
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.