How much money will jim need to finance

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Reference no: EM133368733

Question: While trekking in Nepal, Jim becomes separated from his friends. He stum- bles into a cave where an old monk offers him a cup of water. After drinking it, Jim feels energized and asks what was in the water. You have just drunk from the Holy Grail, replies the monk, now you will live forever. Jim is ecstatic. But after several days of drunken debauchery, the bartender demands to be paid. Jim realizes that if he is going to live forever, he will either have to work forever, or make money by investing.

(A) Assuming Jim can earn 5% a year in the investment markets and he can manage to live on $50,000 annually (paid at the start of every year), how much money will Jim need to finance his now lengthened existence, if he depends solely on investment income?

(B) Suppose after 50 years, Jim has actually earned 6% per year on the amount he invested from part (a). If he is still living on $50,000 per year, how much will be in his investment account?

Reference no: EM133368733

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