Using TVM techniques, calculate the amount of savings you will need to comfortably retire. Be as specific as possible and discuss how you arrived at your conclusion. Justify your rate of return choice

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Reid WolffLv2

25 Apr 2019

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You determine that to retire comfortably you need $2.5 million by the time you retire, in 35 years. How much do you need to save per month (at the end of each month) if the average return on your savings will be 8% per year?

To live comfortably in retirement, you decide you will need to save $2 million by the time you are 65 (you are 30 years old today). You will start a new retirement savings account today and contribute the same amount of money on every birthday up to and including your 65th birthday. Using TVM principles, how much you must set aside each year to make sure that you hit your goal target goal if the interest rate is 5%? What flaws might exist in your calculations, and what variables could lead to different outcomes? What actions could you take ensure you reach your target goal?

In theory, we can use the TVM concept to value any asset. In practice, which assets are easy to value and which assets might be hard to value using the TVM method? Please give an example of an asset that might be difficult to value and discuss why it is tough to value using the TVM approach. (Hint: Note the information you need to actually calculate present value using the PV formula.)

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Using TVM techniques, calculate the amount of savings you will need to comfortably retire. Be as specific as possible and discuss how you arrived at your conclusion. Justify your rate of return choice

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