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How much will bilbo have to save in account

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Reference no: EM132964020

Bilbo Baggins wants to save money to meet his retirement objectives. He would like to be able to retire 30 years from now with a retirement income of $14,135 per month for 20 years, with the first payment received 30 years and 1 month from now. After he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $828,757 to his nephew Frodo. The post-retirement return is equal to 7.2%.

Before his retirement (from Y1 to Y30),

  • he plans to deposit $2,000 per month in Account #1, which will earn 3.6%, and
  • $x per month in Account #2, which will earn 5.4%.

Prolem 1: How much will Bilbo have to save in Account #2 every month (i.e., $x) in order to achieve his retirement objectives?

Reference no: EM132964020

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