Carl Wilfred wishes to have $400,000 in a retirement fund 20 years from now. He can create
Question:
Carl Wilfred wishes to have $400,000 in a retirement fund 20 years from now. He can create the retirement fund by making asingle lump-sum deposit today.
a. If he can earn 6% on his investments, how much must Carl deposit today to create the retirement fund? If he can earn only 4% on his investments? Compare and discuss the results of your calculations.
b. If upon retirement In 20 years Carl plans to Invest the $400,000 in a fund that earns 5%, what is the maximum annual withdrawal ho can make over the following 15 years?
c. How much would Carl need to have on deposit at retirement to annually withdraw $35,000 over the 15 years if the retirement fund earns 8%?
d. To achieve his annual Withdrawal goal of $35,000 calculated in part c, how much more than the amount calculated in part a must Carl deposit today in an investment earning 5% annual interest?
Personal Financial Planning
ISBN: 9780357438480
15th Edition
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk