Question 2: Based upon what you know about compound growth and loan calculations, make some...
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Question 2:
Based upon what you know about compound growth and loan calculations, make some calculations for a hypothetical family that makes $80,000 in gross income, and wants to retire early, after working 25 years, with a portfolio of $1,500,000. Assume they are 25 years old today, will need two new or used cars to get to work, have retirement plans they can contribute to, and would like to buy a house within five years. You do not need to consider raises in their joint income. Please answer the following questions in your response, write your answers in paragraph form, and include the math to support your answers:
How much should they save monthly for retirement, assuming they earn 10%, compounded monthly?
How much can they afford for two cars, assuming they pay about 30% in total in taxes and other deductions from their pay, and keeping in mind their retirement savings plan?
How much can they afford to spend on a home? Should they get a 30 year loan or 15 year loan, and why? Use what you know about Debt-to-Income ratios. Also keep in mind their retirement savings, and the cost of their cars.
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