What equal annual amount must garrett save

Assignment Help Financial Management

Reference no: EM131338887

Garrett Erdle has just turned 26 years of age. Although Garrett currently has a negative net worth, he expects to pay off all of his financial obligations within four years and then to embark on an aggressive plan to save for retirement. He wishes to be able to withdraw $100,000 per year during the first 10 years of retirement (the first withdrawal coming on his 61st birthday) and $150,000 during the next 10 years of retirement.

As a precaution against unexpected longevity, he would like to have a net worth of $500,000 after the withdrawal on his 80th birthday. Garrett expects the after-tax return on his investments to be 6 percent until he turns age 50, and 7 percent thereafter.

What equal annual amount must Garrett save at the end of each year (the first deposit will occur on his 31st birthday and the last deposit will occur on his 60th birthday) to meet these retirement goals?

Reference no: EM131338887

Questions Cloud

How much must frank save at end of each of the next 10 years : How much must Frank save at the end of each of the next 10 years in order to provide for Laura's education and the Mercedes?

What equal amount must he save at the end of years 11 : What equal amount must he save at the end of years 11 through 30 to meet this objective? The interest rate for the first 10 years will be 5 percent.

What is the way to protect our credit card from hackers : what is the best way we can protect our credit card from hackers?

Develop an amortization schedule for the loan : Crab State Bank has offered you a $1,000,000 5-year loan at an interest rate of 11.25 percent, requiring equal annual end-of-year payments that include both principal and interest on the unpaid balance. Develop an amortization schedule for this lo..

What equal annual amount must garrett save : What equal annual amount must Garrett save at the end of each year (the first deposit will occur on his 31st birthday and the last deposit will occur on his 60th birthday) to meet these retirement goals?

What cubic polynomial function models the data : Which model do you think is more appropriate? Explain?

How much must proctor save per year during the 20 years : Hackney has advised Proctor that she can safely assume that all savings will earn 12 percent per annum until she retires, but only 8 percent thereafter. How much must Proctor save per year during the 20 years preceding retirement?

How much can you withdraw : If you plan on making 20 equal withdrawals at the beginning of each year from the account , how much can you withdraw?

Did the attendance for 1998 follow your model : In 1998, Mark McGwire and Sammy Sosa raced to break the homerun record. That year the attendance reached 70.6 million. Did the attendance for 1998 follow your model? Do you think the race to break the homerun record affected attendance? Why or why..

User Account

All Pages