Paul and Maria want to have enough money to travel around the world when they retire. They both just turned 30 and will retire when they turn 60. They earn a total of $9,000 after taxes each month. Their monthly expenditures include $3,000 in mortgage payments, $850 in car payments, and $1,450 in other expenses. They approached a fund manager and decided to invest the rest of their income at the end of each year. They expect to earn a 10 percent annual rate of return for each of the next 30 years. When they retire, they will sell their cottage for an expected price of $50,000.
a. Determine how much they will have when they retire.
b. How much can Paul and Maria withdraw annually at the beginning of each year after they retire if they expect to live until they are 90?

  • CreatedFebruary 25, 2015
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