Question 21.101

71. (Spreadsheet helpful) Your roommate (a business major) has already planned her retirement and started funding it in 2015. She plans to retire in 2050 at age 57 on $100,000 per year in 2050 dollars, living on just the interest on her investments. Assume that she realizes a steady 7.2% interest rate and assume a steady 3% annual inflation. (Suggested by Terence Blows, Northern Arizona University.)

  1. What must the size of her nest egg be, and what should her monthly investment be over the 35 years, to achieve this goal?
  2. What will be the value in 2015 dollars of her 2050 income of $100,000?
  3. What will be the value in 2015 dollars of her income of $100,000 in 2078 (when she is 85)?

71.

(a) Nest egg:

Monthly deposit:

(b)

(c)