Hugo is now 50 and plans to retire by the age 60. He is single, owns...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Hugo is now 50 and plans to retire by the age 60. He is single, owns an apartment with current market value around HKD 4.5 million, with a mortgage to be paid down in 10 years. Currently, he has an income of $30,000 per month but does not have much savings (after all expenses including mortgage) but expects to have HKD 1 million in his MFP account when he retires. He figures that he needs $12,000 per month (S144,000 per year) in today's term to live a comfortable live then. 1. Assuming that the MPF account can generate a real rate of return of 2.4% per year (after adjusting for inflation), how much he can receive per month the first year he retires if he draws money out from his MPF account such that the account balance is 0 by the time he turns 82. (Hint: First determine the monthly income required aged 60.) 2. What is the shortfall per month during his first year of retirement? 3. What alternatives Hugo has in order to generate enough to cover the shortfall, if possible. Try to work out the math briefly for your suggestions. If not, what advices will you give Steve? 4. State the assumptions you use and implied in the case. Criticize the assumptions used. 5. Suggest how the government can help in this case. Hugo is now 50 and plans to retire by the age 60. He is single, owns an apartment with current market value around HKD 4.5 million, with a mortgage to be paid down in 10 years. Currently, he has an income of $30,000 per month but does not have much savings (after all expenses including mortgage) but expects to have HKD 1 million in his MFP account when he retires. He figures that he needs $12,000 per month (S144,000 per year) in today's term to live a comfortable live then. 1. Assuming that the MPF account can generate a real rate of return of 2.4% per year (after adjusting for inflation), how much he can receive per month the first year he retires if he draws money out from his MPF account such that the account balance is 0 by the time he turns 82. (Hint: First determine the monthly income required aged 60.) 2. What is the shortfall per month during his first year of retirement? 3. What alternatives Hugo has in order to generate enough to cover the shortfall, if possible. Try to work out the math briefly for your suggestions. If not, what advices will you give Steve? 4. State the assumptions you use and implied in the case. Criticize the assumptions used. 5. Suggest how the government can help in this case.
Expert Answer:
Answer rating: 100% (QA)
Answer The question is based on the concept present value and future value of money with annuity pay... View the full answer
Related Book For
Fundamentals of Physics
ISBN: 978-0471758013
8th Extended edition
Authors: Jearl Walker, Halliday Resnick
Posted Date:
Students also viewed these finance questions
-
An Australian company requires USD but does not have access to direct USD borrowing or finds it prohibitively expensive. The company decides to borrow in Australian dollar at 90-day BBSW and enter a...
-
1. Name at least two Chinese government regulations that in your opinion affect the housing market in China the most? Why? 2. How, in your opinion, the US government would or should regulated an...
-
Elizabeth Yeo, aged 60, is managing director of USX and plans to retire in one year. Yeo will receive a lump sum severance payment of $500,000 from the company and plans to close out her company 401K...
-
DTG agreed to merge with the SPQ. The total equity purchase price of $45,000 is going to be 50% financed issuing DTGs common shares and 50% financed with cash raised by DTG issuing long-term debt....
-
Zenon Corporation (a calendar-year corporation) began work on a new experimental project in 2012. It incurred $8,000 in qualifying research expenses in 2012 and $11,000 in 2013. The benefits from the...
-
Metal Supplies is concerned about its cash management. On average, the days sales in inventory (duration of inventory on shelf) is 90 days. Accounts receivable are collected in 90 days, while...
-
Determine whether each random variable x is discrete or continuous. Explain your reasoning. 1. Let x represent the number of Fortune 500 companies that lost money in the previous year. 2. Let x...
-
The data in file XR11100 are the weights (in grams) for random samples of grain packages filled by two different filling machines. The machines have a fine adjustment for the mean amount of fill, but...
-
The ideal air to fuel ratio for an engine is 14.8:1. If a vehicle burns 7 lb of fuel, how many pounds of air should it draw to achieve the ideal ratio
-
The Production manager of the Good Time Wine Rack Company is retiring and the Managing Director is looking to replace her. You are preparing a work schedule as youare hoping to be offeredthe position...
-
Given the data calculated in Parts A, B, C, and D, determine the initial rate for a reaction that starts with 0.85 M of reagent A and 0.90 M of reagents B and C? For the reaction A+B+CD+E , the...
-
Communication of your differentiated HR architecture How do you intend to communicate the differences in HR practices between strategic and non-strategic talent pools? What roles do distributive...
-
You are given three displacements from your current location that lead to the spot where a buried treasure is located. They are: i. 72.4 m, 32 east of north; ii. 57.3 m, 36 south of west; iii. 17.8...
-
Communication is a major component of getting your ideas and findings across to your client. Yet, many times the consultant encounters resistance from the client, questioning the findings or...
-
Communication practices and any issues that likely to arise in the project. Briefly discuss the headings below: Communication dissemination including: Information type Purpose Frequency Channel Owner...
-
6 Suppose you bargain with someone over splitting 100. This amount is reduced by every minute. The negotiation proceeds with one offer made each minute. There will be 6 rounds of offers after which...
-
A company that develops an automated customer service model is interested in knowing whether two versions, Version A and Version B, will get different ratings from customers. Participants in a focus...
-
For the following exercises, find the area of the triangle. Round to the nearest hundredth. 22 50 36
-
(a) What total (excess) charge q must the disk in Figure have for the electric field on the surface of the disk at its center to have magnitude 3.0 x 106 N/C, the E value at which air breaks down...
-
Find the slit separation of a double-slit arrangement that will produce interference fringes 0.018 rad apart on a distant screen when the light has wavelength = 589 nm.
-
A thin-walled pipe rolls along the floor. What is the ratio of its translational kinetic energy to its rotational kinetic energy about the central axis parallel to its length?
-
A fertilizer producing company purchases nitrates, phosphates, potash, and an inert chalk base and produces four different fertilizers A, B,C, and D. The cost of these nitrates, phosphates, potash,...
-
Heavy fuel oil, initially semisolid at $15^{\circ} \mathrm{C}$ is to be heated and pumped through a $15 \mathrm{~cm}$ diameter (inside) pipe at the rate of $20000 \mathrm{~kg} / \mathrm{h}$. The pipe...
-
The topological optimization is discussed in chapter 1. Here, we will consider a topological optimization problem for a chemical process plant. The layout of the chemical process plant has been shown...
Study smarter with the SolutionInn App