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a. You want to retire in 30 years and be able to withdraw the equivalent of $90,000 per year (in today's dollars) from a retirement fund. Assume 3% inflation. You plan to be retired for 20 years. Assuming you can earn 12% on your investments BEFORE retirement and 7% on your investments DURING retirement, how much will you need to save per month in order to be able to fund this retirement?

b. You want to retire on the equivalent of $50,000 per year in today's money. Inflation is expected to be 3%. You will retire in 30 years. You will earn 10% annually on your investments from not till retirement and you will earn 8% DURING retirement (which is expected to last 20 years). How much do you need to save per MONTH in order fund this retirement?

c. Compare two loans:

Loan 1: $175,000; 8% annual (monthly payments); 30 years.

Loan 2: $175,000; 7% annual (monthly payments); 15 years.

If you pay an additional $250 per month in additional principle on Loan 1 ONLY, which loan pays off sooner?

d. Loan of $175,000, 8% interest (annual), monthly payments, 360 periods (months): How many periods will it take to pay off this loan if you pay an extra 350 per month in extra principle?

e. Compare two loans:

Loan 1: $175,000, 8% annual interest, 30 years (monthly PMTs)

Loan 2: $175,000, 7% annual interest, 15 years (monthly PMTs)

How much MORE total interest do you pay on the 30 year loan vs. the 15 year loan?

f. How much total interest will you pay if you borrow $175,000 for 30 years (monthly payments) at 8% annual interest?

Please answer all or none.

Financial Management, Finance

  • Category:- Financial Management
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