wi98midtermmba810

wi98midtermmba810 - OSU, MID-TERM EXAM FOR MBA 811 Anil K....

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OSU, MID-TERM EXAM FOR MBA 811 Anil K. Makhija, Winter 1998 You are allowed 1 hour 30 minutes to answer the following 5 questions. There is substantial credit for method. Please show all your work. The exam carries a total of 60 points. Good luck. 1.You are an investment advisor who has been approached by a client for help on his financial strategy. He has $250,000 in savings in the bank. He is 55 years old and expects to work for 10 more years, making $100,000 a year. He expects to earn 5% on his investments for the foreseeable future. Ignoring tax considerations: A.Once he retires in 10 years from now, he would like to withdraw $80,000 a year for the following 25 years (because he expects to live till he is 90!). How much would he need in the bank 10 years from now? (7.5 points) B.How much of his income would he need to save each year for the next 10 years to be able to afford these planned withdrawals ($80,000 a year) after the tenth year? (7.5 points)
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This note was uploaded on 07/17/2008 for the course MBA 810 taught by Professor Makhija during the Winter '02 term at Ohio State.

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wi98midtermmba810 - OSU, MID-TERM EXAM FOR MBA 811 Anil K....

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