He can afford to save 2500 permonth for the next 10 years


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 $20,000 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 $380,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of$900,000 to his nephew Frodo. He can afford to save $2,500 permonth for the next 10 years. If he can earn an 10 percent EAR before he retires and an 7 percent EAR after he retires, how much will he have to save each month in years 11 through 30?

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Finance Basics: He can afford to save 2500 permonth for the next 10 years
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