A 40 years old woman is preparing for her retirement at the age of 65. She estimates
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A 40 years old woman is preparing for her retirement at the age of 65. She estimates that she can live on $10,000 per year in terms of present-day dollars (constant, zero date, deflated, todays). It is estimated that the future rate of inflation (f)will be 8% annually; she can invest her savings (market rate i) at 13% annually.1. What is the value of the inflation free interest rate?2. What equal amount must she save per year until she retires, so that she can make withdrawals that will allow her to live comfortably for 15 years beyond her retirement?
Related Book For
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown
Posted Date: