Mr. Wilks is 30 years old today and wants to set aside an equal amount at the end of each of the next 30 years into a retirement fund earning 10% p.a. so that he can retire at age 60. At retirement , the funds will be transferred to an investment account earning 6% p.a. He expects to live to age 80 and wants to be able to withdraw $375,000 per year from the account on his 61st through 80th birthdays. He also wants to leave $550,000 as an inheritance to his children at age 80. How much money will he need to save in his retirement account per year to achieve these objectives
Mr. Wilks is 30 years old today and wants to set aside an equal amount at the end of each of the next 30 years into a retirement fund earning 10% p.a. so that he can retire at age 60. At retirement , the funds will be transferred to an investment account earning 6% p.a. He expects to live to age 80 and wants to be able to withdraw $375,000 per year from the account on his 61st through 80th birthdays. He also wants to leave $550,000 as an inheritance to his children at age 80. How much money will he need to save in his retirement account per year to achieve these objectives
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 10P
Related questions
Question
Mr. Wilks is 30 years old today and wants to set aside an equal amount at the end of each of the next 30 years into a retirement fund earning 10% p.a. so that he can retire at age 60. At retirement , the funds will be transferred to an investment account earning 6% p.a. He expects to live to age 80 and wants to be able to withdraw $375,000 per year from the account on his 61st through 80th birthdays. He also wants to leave $550,000 as an inheritance to his children at age 80. How much money will he need to save in his retirement account per year to achieve these objectives?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning