Can you help me with this finance problem ?
I have to solve a finance problem and I'm not very sure how to tackle it :/
Suppose Mr road will live 20 more years.
Mr. Road has 180'000 invested yielding 9% interest, he also has 12'000 in a savings account yielding 5%. He wants to keep the savings account intact for unexpected expenses.
He plans to have living expenses of 1'500 a month and plans to spend 500 a month on travel and hobbies.
Mr. Road will also receive 750 per month from social security payments for the rest of his life.
His living and hobby expenses, as well as the 750 a month from social security payments will increase with inflation which is 4%. The 9% from the investments will not increase with inflation.
1. Can he spend all the interest from his investment portfolio ?
2.How much could he withdraw at year end if he want to keep his real value intact?
3.If he is willing to use up all the investment portfolio during those 20 years, how much can he afford to spend per month?
Do you guys have any idea how I could solve this?
Thanks in advance!
