You plan to save $600 per month for the next 40 years until you retire. After you retire you want to withdraw $250,000 per year for 30 years. If you expect to earn 6% after retirement, what annual rate will you need to earn until you retire to meet your goal?

Explanation:

The question is solved by first calculating the amount saved for retirement.

Enter the below in a financial calculator to compute the present value:

PMT= -250,000

N= 30

I/Y= 6

Press the CPT key and PV to compute the present value.

The value obtained is 3,441,207.79.

Therefore, the amount saved at the time of retirement is $3,441,207.79.

The annual interest rate needed to meet the retirement goal is computed by entering the below in a financial calculator:

FV= 3,441,207.79

N= 40 years*12= 480 months

PMT= 600

Press the CPT key and I/Y to compute the interest rate.

The monthly interest is 0.8065.

Therefore, the annual interest rate is 0.8065%*12= 9.6777%

=       9.68%

support your answer using the data presented. (5 points). 4. based on the information you used to schedule and curve, which product would you recommend the shoe hut focus on, and why? provide details that support your answer. (5 points).

a. money supply  

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