Suppose that you were to receive a $ 30,000 gift upon graduation from your masters degree program,
Question:
a. Assuming you earn an annual compounded rate of 7.5 percent on the gift and the IRA investments, how much would be available when you retire at age 65 years?
b. If you hope to draw money out of that investment at the end of every month for 30 years following retirement, how much could you withdraw each month? Assume that during the years you are retired, the money earns an annual rate of 6 percent compounded monthly.
c. You realize that if you draw out that amount each month there will be nothing left for your two children. You decide that you want to leave $ 250,000 to each of your children 30 years after you retire. How much would you have to invest at your retirement to fund your children’s inheritance? Assume that you will earn 7.5 percent compounded annually on the money invested for your children.
d. If you set aside the money for your children, how much could you draw out each month during your retirement if you can earn 6 percent per annum compounded monthly on the portion that is not set aside for the children?
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Related Book For
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese
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