What is the real rate of return on their investments

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Q1. Lynda wants to retire when she is 65 years old. She estimates that she will need $50,000 before tax at the beginning of each year to sustain her desired lifestyle. She also assumes that she will live until she is 90 years old. If she  can generate a 7% return annually on this investment. Ignoring inflation, taxes and income from other sources, how much does Lynda need to accumulate by the time she is ready to begin her retirement?

If the Griffins only earn an investment return of 5.5% during their retirement, instead of the anticipated 7.5%, how much more must the Griffins save by their retirement date in order to achieve their stated income objective (ignore inflation in your calculation)?

Q2. If the Ramesh achieve a 6% nominal investment return, and inflation was 3.1%, what is the real rate of return on their investments?

Reference no: EM133079813

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