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How much will he have to save each month in years

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Question - Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $30,000 per month for 25 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 20 years at an estimated cost of $1,488,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $500,000 to his nephew Frodo. He can afford to save $2,300 per month for the next 20 years.

Required - If he can earn a 11 percent EAR before he retires and a 8 percent EAR after he retires, how much will he have to save each month in years 21 through 30?

Reference no: EM132892556

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