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    Old Alfred Road Who Is Well Known To Drivers On The

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    Amit Pandey
    Mr. Road is a 70-year-old retiree who owns his home outright and has $180,000 in conservative investments yielding 9% interest and $12,000 in savings. He wants the savings to remain intact and needs his investments to cover $2,000 per month in living expenses. Given an assumed 4% inflation rate and 9% investment returns over 20 years, he can safely spend $3,300 per month to maintain his purchasing power.

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    Old Alfred Road Who Is Well Known To Drivers On The

    Uploaded by

    Amit Pandey
    73 views2 pages
    Mr. Road is a 70-year-old retiree who owns his home outright and has $180,000 in conservative investments yielding 9% interest and $12,000 in savings. He wants the savings to remain intact and needs his investments to cover $2,000 per month in living expenses. Given an assumed 4% inflation rate and 9% investment returns over 20 years, he can safely spend $3,300 per month to maintain his purchasing power.

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    Old Alfred Road Who is Well Known to Drivers on The

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    Mr. Road is a 70-year-old retiree who owns his home outright and has $180,000 in conservative investments yielding 9% interest and $12,000 in savings. He wants the savings to remain intact and needs his investments to cover $2,000 per month in living expenses. Given an assumed 4% inflation rate and 9% investment returns over 20 years, he can safely spend $3,300 per month to maintain his purchasing power.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    73 views2 pages

    Old Alfred Road Who Is Well Known To Drivers On The

    Uploaded by

    Amit Pandey
    Mr. Road is a 70-year-old retiree who owns his home outright and has $180,000 in conservative investments yielding 9% interest and $12,000 in savings. He wants the savings to remain intact and needs his investments to cover $2,000 per month in living expenses. Given an assumed 4% inflation rate and 9% investment returns over 20 years, he can safely spend $3,300 per month to maintain his purchasing power.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Solved: Old Alfred Road who is well known to drivers on

    the

    Old Alfred Road, who is well-known to drivers on the Maine Turnpike, has reached his
    seventieth birthday and is ready to retire. Mr. Road has no formal training in finance but has
    saved his money and invested carefully.

    Mr. Road owns his home-the mortgage is paid off-and does not want to move. He is a widower,
    and he wants to bequeath the house and any remaining assets to his daughter.

    He has accumulated savings of $180,000, conservatively invested. The investments are yielding
    9% interest. Mr. Road also has $12,000 in a savings account at 5% interest. He wants to keep
    the savings account intact for unexpected expenses or emergencies.

    Mr. Road's basic living expenses now average about $1,500 per month, and he plans to spend
    $500 per month on travel and hobbies. To maintain this planned standard of living, he will have
    to rely on his investment portfolio. The interest from the portfolio is $16,200 per year (9% of
    $180,000), or $1,350 per month.

    Mr. Road will also receive $750 per month in Social Security payments for the rest of his life.
    These payments are indexed for inflation. That is, they will be automatically increased in
    proportion to changes in the consumer price index.

    Mr. Road's main concern is with inflation. The inflation rate has been below 3% recently, but a
    3% rate is unusually low by historical standards. His Social Security payments will increase with
    inflation, but the interest on his investment portfolio will not.

    What advice do you have for Mr. Road? Can he safely spend all the interest from his investment
    portfolio? How much could he withdraw at year-end from that portfolio if he wants to keep its
    real value intact?

    Suppose Mr. Road will live for 20 more years and is willing to use up all of his investment
    portfolio over that period. He also wants his monthly spending to increase along with inflation
    over that period. In other words, he wants his monthly spending to stay the same in real terms.
    How much can he afford to spend per month?

    Assume that the investment portfolio continues to yield a 9% rate of return and that the inflation
    rate will be 4%.

    Old Alfred Road who is well known to drivers on the

    Reach out to [email protected] for enquiry.


    ANSWER
    https://solvedquest.com/old-alfred-road-who-is-well-known-to-drivers-on-the/

    Reach out to [email protected] for enquiry.


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