Your client is 40 years old; and she wants to begin saving for her retirement, with the firs payment to come one year from now. She can save Rs. 5000 per year and you advise her to invest it in the stock market., which expect to provide average return of 9% in the future.
If she follows your advice, how much money she will have at the age of 65?
How much she will have at the age of 70?
She expects to live for 20 years if she retires at 65 and for 15 years if she retires at the age of 70. If her investment continues to earn the same rate of return, how much will she be able to withdraw at the end of each year after retirement at each retirement age?
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Explanation:
Louis Dixon, a dentist, resigned from his position with a large dental group in order to begin his
own pediatric dental practice. The practice was organized as a sole proprietorship, called Louis
Dixon Pediatric Dentistry. The business transactions during September while the new venture was
being organized are listed below.
Sept. 1
Sept. 10
Dixon opened a bank account in the name of the business by depositing $50,000 cash,
which he had saved over a number of years.
Purchased a small office building located on a large lot for a total price of $182,400,
of which $106,000 was applicable to the land and $76,400 to the building. A cash
payment of $36,500 was made and a note payable was issued for the balance of the
purchase price.
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