# Vernal Pool, a self-employed herpetologist, wants to put aside a fixed fraction of her annual income as savings for retirement. Ms. Pool is now 40 years old and makes $40,000 a year. She expects her income to increase by 2

Vernal Pool, a self-employed herpetologist, wants to put aside a fixed fraction of her annual income as savings for retirement. Ms. Pool is now 40 years old and makes $40,000 a year. She expects her income to increase by 2 percentage points over inflation (e.g., 4 percent inflation means a 6 percent increase in income). She wants to accumulate $500,000 in real terms to retire at age 70. What fraction of her income does she need to set aside? Assume her retirement funds are conservatively invested at an expected real rate of return of 5 percent a year. Ignore taxes.

## This problem has been solved!

Do you need an answer to a question different from the above? Ask your question!

- Tutor Answer

## Let x be the fraction of Ms Pools salary to be set aside each year At any point in the …View the full answer

**Related Book For**

## Principles of Corporate Finance

**ISBN:** 978-0072869460

7th edition

**Authors:** Richard A. Brealey, Stewart C. Myers

## Students also viewed these Corporate Finance questions