Sandy is planing his retirementthe rate of interest that he


Sandy is planing his retirement.The rate of interest that he can lend and borrow at the bank is 6 percent. He currently has $ 125000 in the bank. He intends to buy a car 3 years from now. He estimates it wil cost $ 55000 then. He would like to buy his mother a house 10 years from now. He estimates it will cost $ 230000 then. Sandy plans to retire in 20 years and his estimated annual living expenses after retirement is $ 100000. Sandy would like to withdraw $ 100000 per year from his saving acccount with the first withdrawal being 21 years from now and the last being 40 years from now.

What is present value of all Sandy's expected future expenses?

What is the constant amount he needs to save in the bank each year assuming the first time he puts away money is 1 year from now and the last time is 20 years from now?

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Financial Econometrics: Sandy is planing his retirementthe rate of interest that he
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