Four Years from Now, Tim and Justine Plan to Take

question 117

Short Answer

Four years from now, Tim and Justine plan to take a year's leave of absence from their jobs and travel through Asia, Europe, and Africa. They want to accumulate enough savings during the next four years so they can withdraw $3,000 at each month-end for the entire year of leave. What amount must they pay into the fund at the end of every calendar quarter for the next four years to reach their goal? The planning assumptions are that their savings will earn 6% compounded quarterly for the next four years and 4.2% compounded monthly during the fifth year.

---

Definitions:

Sparsely Populated

Areas or regions characterized by a low density of population or few inhabitants per unit of land area.

Densely Populated

Referring to areas that have a high number of residents or entities in a small geographical space.

Atonement Suicide

The act of taking one's own life as a means of making amends or seeking forgiveness for real or perceived offenses.

Felony Suicide

A term describing an act where an individual commits a serious crime, such as a felony, with the intention of provoking law enforcement to kill them, effectively committing suicide by cop.