a. According to the rule of 72, how many times your money will be doubled over a 36- year period if it earns a rate of return of 8% per year? b. Using the rule of 72, estimate the value of an initial investment of $100K at the end of a 36-year period if it earns a rate of return of 8% per year? c. According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K? d. Referring to part c, what will be your 3 rd annual withdrawal amount if the inflation rate during the 2 years since your initial withdrawal averaged 2% per year? Show your work.
a. According to the rule of 72, how many times your money will be doubled over a 36- year period if it earns a rate of return of 8% per year? b. Using the rule of 72, estimate the value of an initial investment of $100K at the end of a 36-year period if it earns a rate of return of 8% per year? c. According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K? d. Referring to part c, what will be your 3 rd annual withdrawal amount if the inflation rate during the 2 years since your initial withdrawal averaged 2% per year? Show your work.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
Related questions
Question
a. According to the rule of 72, how many times your money will be doubled over a 36- year period if it earns a
b. Using the rule of 72, estimate the value of an initial investment of $100K at the end of a 36-year period if it earns a rate of return of 8% per year?
c. According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K?
d. Referring to part c, what will be your 3 rd annual withdrawal amount if the inflation rate during the 2 years since your initial withdrawal averaged 2% per year? Show your work.
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
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
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning