What is the value of your human capital

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Reference no: EM132001325

You are 30 years old and want to retire at age 60 with enough money to provide an income of $40,000 per year for 25 years. The expected annual rate of interest on your investments is 9%. How much must you save at the end of each year between now and age 60 to achieve your goal?

You are 30 years old and want to retire when you are 65 and you expect to live until you are 85 years old. Your salary is $60,000 per year and the real rate of return is 4%. (Note: Assume there are no taxes and there is no growth in real income.)

a) What is the value of your human capital?

b) What is your permanent income?

c) If a social security tax of $5,000 per year is imposed, but you expect your social security benefit to be only $1,000 per year (beginning at age 65), what is your new permanent income?

Reference no: EM132001325

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