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Calculating the quarterly investments

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Dr. Howard He is planning for his golden years. He will retire in 20 years, at which time he plans to begin withdrawing $50,000 annually to pay for his living expenses during retirement. He is expected to live for 30 years following his retirement. His financial advisor thinks he can earn 7% annually before his retirement and 10% after his retirement. How much does he need to invest at the end of each quarter to prepare for his financial needs after his retirement? Please show calculation.

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Solution Summary

Solution describes the steps to calculate the periodic investments sufficient enough to meet the given retirement needs.

Solution Preview

Assume he withdraws first installment at the time of retirement.

Let us calculate the amount needed at the time of retirement.
Periodic withdrawals=R=$50000
Number of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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