1)Mr. Smith, aged 25, has $25,000 cash to invest for his retirement. In addition, he plans to save and invest $8,000 per year (at the end of every year) for the next 40 years, at which time he will be 65 and retire. The rate of return is 6% per year.

a) How much money will he have at the end of 40 years?

b) Mr. Smith plans to spend $55,000 per year (at the end of each year) after his retirement (age 65). He expects that he will live until age 90. The rate of return is 6% per year. Will he have enough money to support his retirement spending? Show your calculation

c) How much could he spend each year in retirement so that there are no funds remaining at age 90?

Answer rating: 100% (QA)

SOLUTION a To calculate how much money Mr Smith will have at the end of 40 years we can use the form... View the full answer