How much will he have to save each month

Reference no: EM13294374

Bilbo Baggins wants to save money to meet three objectives.First, he would like to be able to retire 30 years from now withretirement income of $20,000 per month for 25 years, with the firstpayment received 30 years and 1 month from now. Second, he wouldlike to purchase a cabin in Rivendell in 10 years at an estimatedcost of $380,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of$900,000 to his nephew Frodo. He can afford to save $2,500 permonth for the next 10 years. If he can earn an 10 percent EAR before he retires and an 7 percent EAR after he retires, how much will he have to save each month in years 11 through 30?

Reference no: EM13294374

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