You plan to retire after working for 45years. You estimate you need $6,000,000 to retireand live comfortably. Assume time zero is todayand you will retire at the end of 45 years. Otheropportunities exist to invest available capitalelsewhere and earn a nominal 7% interest rateeach year compounded annually.A. What amount would you need to invest eachyear, including today (Year 0 through 45), to fullyfund your $6,000,000 retirement goal?B. How much money will you be living on annuallyfor the next 30 years after retirement (Year 46through 76) if you reach your retirement goal of$6,000,000?

Nominal interest rate refers to the interest rate before taking inflation into account. Here, we…

ears. You estimate you need $6,000,000 to retire nd live comfortably. Assume time zero is today nd you will retire at the end of 45 years. Other pportunities exist to invest available capital elsewhere and earn a nominal 7% interest rate

ears. You estimate you need $6,000,000 to retire nd live comfortably. Assume time zero is today nd you will retire at the end of 45 years. Other pportunities exist to invest available capital elsewhere and earn a nominal 7% interest rate

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: The Basic Tools Of Finance

Section: Chapter Questions

Problem 3CQQ

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Question

You plan to retire after working for 45
years. You estimate you need $6,000,000 to retire
and live comfortably. Assume time zero is today
and you will retire at the end of 45 years. Other
opportunities exist to invest available capital
elsewhere and earn a nominal 7% interest rate
each year compounded annually.
A. What amount would you need to invest each
year, including today (Year 0 through 45), to fully
fund your $6,000,000 retirement goal?
B. How much money will you be living on annually
for the next 30 years after retirement (Year 46
through 76) if you reach your retirement goal of
$6,000,000?

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