Save money to meet three objectives

Assignment Help Financial Management
Reference no: EM13987964

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 $27,000 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 10 years at an estimated cost of $370,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1,650,000 to his nephew Frodo. He can afford to save $3,100 per month for the next 10 years. If he can earn a 10 percent EAR before he retires and a 7 percent EAR after he retires, how much will he have to save each month in years 11 through 30?

Reference no: EM13987964

Questions Cloud

What wavelength of light coming from second monochromatic : If the 11th order bright fringe from the first light source coincides with the 14th order bright fringe from the second light source, what is the wavelength of the light coming from the second monochromatic light source?
Paper - antibullying programs reviewed : Social Psychology Paper - five antibullying programs reviewed.
What was the amount of the deposit at the end of year : You put $9,000 in an account earning 7%. After 3 years, you make another deposit into the same account. Five years later (that is, 8 years after your original $9,000 deposit), the account balance is $23,000. What was the amount of the deposit at the ..
Examine impact of ariel birthday present on her marriage : Within Andrea Lee's "The Birthday Present" multiple levels exist as to the true meaning and impact of the birthday present. For your 300 word analysis, examine the impact of Ariel's birthday present on her marriage
Save money to meet three objectives : 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 $27,000 per month for 25 years, with the first payment received 30 years and 1 month from now. He can af..
How long will it take to pay off the mortgage : You decide to take a 30 year mortgage of $150,000 offered by the bank of Montreal. Instead of making the monthly payment of $957.68 every month, you can make half the payment every two weeks ( so that you will make 52/2=26 payments a year). How long ..
What is the outstanding balance : Your mortgage has 25 years left, and has an APR of 6.324% (with semianual compounding) with monthly payments of 1500. what is the outstanding balance. suppose you cannot make the mortgage payment and you are in danger of losing your house to forclosu..
Outline an employee payroll strategy : Income for the firm depends on the number and size of contracts for the year. Knowing that the cash flow into the company may vary, how should employees be paid? Outline an employee payroll strategy using the information in the story.
What is the rate earned on stockholders equity : If net income is $130,000 and interest expense is $40,000 for 2011, what is the rate earned on stockholders' equity for 2011 (rounded to one decimal place)?

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the degree of operating leverage

PrepCo, Inc. is looking to find information on its breakeven point and associated measurements. The following is the data that PrepCo will use in its analysis: Variable operating costs of $15 per unit. Calculate the units needs for PrepCo’s operating..

  Present value of an annuity stream-time value money

This assessment has two parts both addressing the subject of Time Value Money (TVM). Both parts should be submitted in the same paper. The main TVM problems relating to healthcare are: a) present value of a lump sum b) present value of an annuity str..

  Equal to the present value of the redemption amount

A bond with face and redemption amount of $3000 with annual coupons is selling at an effective annual yield rate equal to twice the coupon rate. The present value of the coupons is equal to the present value of the redemption amount. What is the sell..

  What is the total return on this stock

Suppose a stock had an initial price of $74 per share, paid a dividend of $0.80 per share during the year, and had an ending share price of $76. What was the capital gains yield?  What was the dividend yield?  What is the total return on this stock?

  Fixed costs-variable costs

A company has $7.30 per unit variable costs and $5 per unit fixed costs at a volume of 50,000 units. If the company marks up total costs by 0.51, what price should be charged if 70,000 units are expected to be sold?

  Permanent differences between book income and taxable income

Assuming that star bucks had no significant permanent differences between book income and taxable income, did income before tax for financial reporting exceed or fall short of taxable income for 2012? Explain

  Weighted average of that implied by outstanding debt issues

Filer Manufacturing has 5 million shares of common stock outstanding. The current share price is $77, and the book value per share is $8. Filer Manufacturing also has two bond issues outstanding. The most recent dividend was $4.9 and the dividend gro..

  Calculate degrees of financial leverage-operating leverage

The Last Gasp Water Company sells water by the gallon for a price of $0.75. Fixed coasts for the company are $200,000 , and variable coasts are $0.40 per gallon . the company already has $2,000,000 of 10% bonds on its balance sheet. Calculate the deg..

  Used as the initial cash flow for this building project

Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $590,000. The lot was recently appraised at $657,000. The company now wants to build a new retail store on the site. The building cost is estimated at $1,280,000. What ..

  How is relevant costing used in decision making

How is relevant costing used in decision making? What would the relevant costs be in deciding whether to discontinue a segment of business? What would the relevant costs be in deciding how to optimize use of a constrained resource?

  How many days would the cash conversion cycle be changed

Cyree Inc. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of next 35 days, and it pays on time. The firm is searching for ways to sho..

  The firm manufactures a global positioning system gps that

the firm manufactures a global positioning system gps that sells for 2000 with cost of goods sold hardware 30 and

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd