Your client is 40 years old; and she wants to begin saving for her retirement, with the firs payment to come one year from now. She can save Rs. 5000 per year and you advise her to invest it in the stock market., which expect to provide average return of 9% in the future.If she follows your advice, how much money she will have at the age of 65?How much she will have at the age of 70?She expects to live for 20 years if she retires at 65 and for 15 years if she retires at the age of 70. If her investment continues to earn the same rate of return, how much will she be able to withdraw at the end of each year after retirement at each retirement age?

Formula for Annuity: FV = PMT(1+r/n)^nt - 1 r/n Where FV is the annuity future…

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 19P

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Your client is 40 years old; and she wants to begin saving for her retirement, with the firs payment to come one year from now. She can save Rs. 5000 per year and you advise her to invest it in the stock market., which expect to provide average return of 9% in the future.
If she follows your advice, how much money she will have at the age of 65?
How much she will have at the age of 70?
She expects to live for 20 years if she retires at 65 and for 15 years if she retires at the age of 70. If her investment continues to earn the same rate of return, how much will she be able to withdraw at the end of each year after retirement at each retirement age?

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