Bilbo Baggins wants to save money to meet three objectives.First, he would like to be able to retire 30 years from now withretirement income of $32,000 per month for 25 years, with the firstpayment received 30 years and 1 month from now. Second, he wouldlike to purchase a cabin in Rivendell in 10 years at an estimatedcost of $420,000. Third, after he passes on at the end of the 25years of withdrawals, he would like to leave an inheritance of$1,350,000 to his nephew Frodo. He can afford to save $4,100 permonth for the next 10 years. If he can earn an EAR of 10 percentbefore he retires and an EAR of 7 percent after he retires, howmuch will he have to save each month in years 11 through 30?
EAR = x.xx= (x+(xxx/xx)]^xx-x, APR = 12*(1.10)^1/12-1] = x.xxxx= x.xx%
So, xx xxxxxxxxxx xx need:
$4,616,794.32+ $x,xxx,xxx.xx = $xx,xxx,xxx.xx
After xx purchases xxx xxxxx, xxx amount xx will xxxx xx:
FV = $399,441.81*[1+(0.0957/12)]^240 = $x,xxx,xxx.xx
$11,943,828.37-$2,687,244.78 = $9,256,583.59
This xxxxxx xx xxx Fv xx the xxxxxxy xxxxxxx xx must xxxxxxxxxxx 10 xxx xx . So, xxxxxxx annuity xxyxxxx xxxxx xxx FVAequation, xx find xxx xxxxxxy xxxxxxx will xxxx to xx: