Axel, a young student, has just won $125,000 per year for life in the lottery. He wants to save 80% of this amount for buy a house in 5 years. Subsequently, he plans to save 75% of his lottery winnings to accumulate his fund. retirement. Since he has just won the lottery, Axel plans to retire very young, at 35, in 15 years Exactly. Axel believes he can generate an average return of 9% per year on his savings which he will place in a index fund.

a) What will be the maximum value of the house that Axel will be able to buy?

b) Considering that Axel will use all his savings to buy his house, how much will he manage to accumulate to retire?

c) Considering the amount calculated in b), what will be the perpetual annual retirement pension that Axel will be able to receive? allow thanks to his savings, excluding his lottery winnings?

Answer rating: 100% (QA)

a To determine the maximum value of the house that Axel can buy in 5 years we first need to calculat... View the full answer