Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $29,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 20 years at an estimated cost of $1,358,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $900,000 to his nephew Frodo. He can afford to save $2,100 per month for the next 20 years. |
Required: |
If he can earn an 11 percent EAR before he retires and a 9 percent EAR after he retires, how much will he have to save each month in years 21 through 30? |
$11,876.51
$14,845.79
$12,114.04
$11,638.98
$14,397.46
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