You believe you will need to have saved $500,000 by the time you retire in 40 ye
ID: 2613180 • Letter: Y
Question
You believe you will need to have saved $500,000 by the time you retire in 40 years in order to live comfortably. You also believe that you will inherit $100,000 in 10 years. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.)
If the interest rate is 6% per year, what is the future value of your inheritance at retirement?
How much must you save each year to meet your retirement goal? (Assume you save your entire inheritance. This is the amount needed in addition to the inheritance.)
You believe you will need to have saved $500,000 by the time you retire in 40 years in order to live comfortably. You also believe that you will inherit $100,000 in 10 years. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Explanation / Answer
If the interest rate is 6% per year, what is the future value of your inheritance at retirement?
Future value = 100000*(1+6%)^(40-10)
Future value = $ 574349.12
How much must you save each year to meet your retirement goal? (Assume you save your entire inheritance. This is the amount needed in addition to the inheritance.)
Since Future value of inheritance is more than $500,000 by the time you retire than you doest not require any annual saving
Annual savings required $ 0
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