公司理财研究生课程班4天课件例题答案.docVIP

P88,26. The cash flows for this problem occur monthly, and the interest rate given is the EAR. Since the cash flows occur monthly, we must get the effective monthly rate. One way to do this is to find the APR based on monthly compounding, and then divide by 12. So, the pre-retirement APR is: EAR = .11 = [1 + (APR / 12)]12 – 1; APR = 12[(1.11)1/12 – 1] = 10.48% And the post-retirement APR is: EAR = .08 = [1 + (APR / 12)]12 – 1; APR = 12[(1.08)1/12 – 1] = 7.72% First, we will calculate how much he needs at retirement. The amount needed at retirement is the PV of the monthly spending