Reference no: EM132955027
Question - Over the past several years, Mr Lee has been able to save regularly. As a result, today he has $14,188 savings. He wants to establish her retirement fund in 5 years and feels he will need $50,000 to do so.
-If he can earn 12% p.a. on his money, how much will his $14,188 savings be worth in 5 years? Will Mr Lee have $50,000 he needs? If not, how much more money will he need?
-Given your answer to (a), how much will Mr Lee have to save each year over the next 5 years to accumulate the additional money, assuming he can earn interest rate at 12% p.a.?
-If Mr Lee can afford to save only $2,000 a year, given your answer to (b), will he have $50,000 he needs to establish his retirement fund in 5 years? What expected return Mr Lee should seek to grow his savings of $14,188 to $50,000 in 5 years? If he invests in an investment with 12% return per annum, how long should Mr Lee plan ahead for his savings to achieve his retirement fund?
-As a portfolio manager, what possible advice you could suggest Mr Lee to consider to achieve his goal in terms of the time value of money factors/considerations.
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