Philip wants to supplement his pension by $2000 per month with income from his investments. His investments pay him monthly and earn 6% p.a. What value of investments must Philip have in his portfolio to generate enough interest to give him desired income?
Answers
Given :- Philip wants to supplement his pension by $2000 per month with income from his investments. His investments pay him monthly and earn 6% p.a. What value of investments must Philip have in his portfolio to generate enough interest to give him desired income ?
Answer :-
Let us assume that, the required investment is $ x .
given ,
→ Rate = 6% per annum
→ Time = 1 month = (1/12) years .
→ Pension = $2000 / month = interest
so,
→ P = (SI * 100) / (R * T)
→ x = (2000 * 100)/6 * (1/12)}
→ x = 2000 * 100 * 2
→ x = $400000 (Ans.)
Hence, value of investment Philip must have will be $400000 .
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