ou plan to retire in 30 years and plan on saving $15,000 annually, starting next year, for the next 30 years. You expect to need $120,000 about 18 years from now for college tuition for your recently born daughter which must be paid out of these savings. You expect to live 35 years during retirement (the first retirement payment will be 31 years from today) If interest rate is 5%, but you want to keep the same retirement quality of life as if the interest rate is 8.15%. How much extra money do you need to save annuall

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You plan to retire in 30 years and plan on saving $15,000 annually,
starting next year, for the next 30 years. You expect to need $120,000
about 18 years from now for college tuition for your recently born
daughter which must be paid out of these savings. You expect to live 35
years during retirement (the first retirement payment will be 31 years
from today)

 

If interest rate is 5%, but you want to keep the same retirement quality of life as if the interest rate is 8.15%. How much extra money do you need to save annually?

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