John and Marry are a newly married couple who just started working. John's job is in the
Question:
John and Marry are a newly married couple who just started working. John's job is in the private sector and for each month he works, he receives his salary at the end of that month. Mary works at a government institution so, unlike John, she receives her monthly salary at the beginning of the month that she will work in. Every month, they put 500$ each to their savings accounts as soon as they receive their salaries. Their plan is to retire after 40 years of working. 20 years after they start to work, John's wealthy grandparents die, and John inherits a wealth of $50,000 that also can be invested. Interest rate is compounded monthly and stated as 6% APR.
i. How much money will John and Marry see in their bank account in total when they retire?
ii. John and Marry believe that they will live 20 more years after they retire, and they want to be able to spend $20,000 total as a couple in each of the retirement months (spending starts immediately). How much do they need to save individually every month (instead of 500$) while they are working?
Accounting Theory Conceptual Issues in a Political and Economic Environment
ISBN: 978-1412991698
8th edition
Authors: Harry Wolk, James Dodd, John Rozycki