Question

Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $800 and has an existing customer base of 660. Paul plans to raise the annual fee by 6 percent every year and expects the club membership to grow at a constant rate of 4 percent for the next five years. The overall expenses of running the health club are $131000 a year and are expected to grow at the inflation rate of 2 percent annually. After five years, Paul plans to buy a luxury boat for $560,000, close the health club, and travel the world in his boat for the rest of his life.Assuming Paul has a remaining life of 25 years and earns9 percent on his savings.

Calculate account value at retirement

annual withdrawal

round answers to 2 decimal places

  

Answer 1

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