How much money must raymond invest to achieve goals

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Reference no: EM132758398

Question: Raymond is 55 years old has saved nothing for retirement. He just inherited Rm300,000 from his grandfather and wants to invest in a retirement plan. He plans to put the money in an investment account earning a 9% return. He will let the money accumulate for 10 years and when he will retire at age 65. He would like to deposit enough money so that he can begin making withdrawals of RM40,000 per year starting at age 66 and continue for 24 more years when he turns 90. He wants the balance to be 0. After investing in his retirement plan, Raymond wants to spend the rest of his money on a world tour.

a. How much money must Raymond invest to achieve his goals? Construct a timeline to help visualize the details of this investment plan.

b. Suppose Raymond has changed his mind and invest the entire inheritance into the account earning 10%. After making his last withdrawal at age 90, he wants to leave the remaining money to his niece. How much would his niece receive when Raymond withdraws the last annual installment of RM40,00.

Reference no: EM132758398

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