You estimate that by the time you retire in 35 years, you will have accumulated savings of $3.2 million. a. If the interest rate is 8.0% and you live 15 years after retirement, what annual level of expenditure will those savings support? Note: Do not round intermediate calculations. Enter your answer in whole dollars rounded to 2 decimal places. b. Unfortunately, inflation will eat into the value of your retirement income. Assume a 3% inflation rate and work out a spending program for your $3.2 million in retirement savings that will allow you to increase your expenditure in line with inflation. What will be your expenditure amount in real terms for each year of your retirement? Note: Do not round intermediate calculations. Enter your answer in whole dollars rounded to 2 decimal places. a. Annual expenditure b. Real annual expenditure

You estimate that by the time you retire in 35 years, you will have accumulated savings of $3.2 million. a. If the interest rate is 8.0% and you live 15 years after retirement, what annual level of expenditure will those savings support? Note: Do not round intermediate calculations. Enter your answer in whole dollars rounded to 2 decimal places. b. Unfortunately, inflation will eat into the value of your retirement income. Assume a 3% inflation rate and work out a spending program for your $3.2 million in retirement savings that will allow you to increase your expenditure in line with inflation. What will be your expenditure amount in real terms for each year of your retirement? Note: Do not round intermediate calculations. Enter your answer in whole dollars rounded to 2 decimal places. a. Annual expenditure b. Real annual expenditure

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 34P

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