# S.O.S. Mathematics CyberBoard

Your Resource for mathematics help on the web!
 It is currently Fri, 24 May 2013 19:01:25 UTC

 All times are UTC [ DST ]

 Page 1 of 1 [ 1 post ]
 Print view Previous topic | Next topic
Author Message
 Post subject: help with personal investmentPosted: Wed, 26 Jan 2011 05:17:40 UTC
 S.O.S. Newbie

Joined: Sun, 9 Jan 2011 03:12:59 UTC
Posts: 3
5.1 Assume you have \$1 million now, and you have just retired from your job. You expect to live for 20 years, and you want to have the same level of consumption (i.e., purchasing power) for each of these 20 years, after adjusting for inflation. You also wish to leave the purchasing power equivalent of \$100,000 today to your kids at the end of the 20 years as a bequest (or to pay them to take care of you).
You expect inflation to be 3% per year for the next 20 years, and nominal interest rates are expected to stay around 8% per year.

A. Calculate the actual amount of consumption, in nominal dollars, using the stated assumptions.

i. How much do you need for your kids?

ii. If you plan to consume \$1.03 in year 1, how much will you need to have to keep the same real consumption in year 2? In year 10? In year 20?

iii. How much, in nominal dollars, will \$1 of retirement funds earn in year 1? Year 2? Year 10? Year 20?

iv. In an Excel spreadsheet (or in a manual table), calculate the following:

a. annual investment earnings for each year

b. total savings after investment earnings for each year

c. subtract annual consumption from total savings each year

d. by trial and error, or with the Goal Seek command, determine the amount of consumption that will give you exactly \$100,000, in today's purchasing power, at the end of 20 years

Top

 Display posts from previous: All posts1 day7 days2 weeks1 month3 months6 months1 year Sort by AuthorPost timeSubject AscendingDescending
 Page 1 of 1 [ 1 post ]

 All times are UTC [ DST ]

#### Who is online

Users browsing this forum: No registered users

 You cannot post new topics in this forumYou cannot reply to topics in this forumYou cannot edit your posts in this forumYou cannot delete your posts in this forum

Search for:
 Jump to:  Select a forum ------------------ High School and College Mathematics    Algebra    Geometry and Trigonometry    Calculus    Matrix Algebra    Differential Equations    Probability and Statistics    Proposed Problems Applications    Physics, Chemistry, Engineering, etc.    Computer Science    Math for Business and Economics Advanced Mathematics    Foundations    Algebra and Number Theory    Analysis and Topology    Applied Mathematics    Other Topics in Advanced Mathematics Other Topics    Administrator Announcements    Comments and Suggestions for S.O.S. Math    Posting Math Formulas with LaTeX    Miscellaneous