Question

You are planning to save for retirement over the next 25 years. To do this, you will invest $3,000 a quarter in a stock account and $1,000 a quarter in a bond account. These investments will be made at the beginning of each quarter. The return of the stock account is expected to be 8%, and the bond account will pay 4%. When you retire, you will combine your money into an account with a 6% return. How much can you withdraw each month (starting one month from the retirement date) from your account assuming a 20-year withdrawal period?

*please show work

Answer #1

Assuming rate compounded quarterly before retirement and rate compounded monthly after retirement for simplicity

Step 1:

As the savings are beginning of period it is an annuity due

Future value of annuity due=AMount/(periodic rate)*((1+periodic
rate)^n-1)*(1+periodic rate)

Step a) Find the future value of stock account

=3000/(8%/4)*((1+8%/4)^(4*25)-1)*(1+8%/4)

=955430.8561

Step b) Find the future value of bond account

=1000/(4%/4)*((1+4%/4)^(4*25)-1)*(1+4%/4)

=172186.1968

Step c) Find total future value

=955430.8561+172186.1968

=1127617.053

Step 2: Find monthly withdrawals

As the withdrawals are end of the period it is an ordinary
annuity

Periodic payments in ordinary annuity=Value*periodic
rate/(1-1/(1+periodic rate)^n)

=1127617.053*(6%/12)/(1-1/(1+6%/12)^(12*20))

=8078.598788

8. You are planning to save for retirement over the next 25
years. To do this,
you will invest $3,000 a quarter in a stock account and $1,000 a
quarter in a bond
account. These investments will be made at the beginning of each
quarter. The return of
the stock account is expected to be 8%, and the bond account will
pay 4%. When you
retire, you will combine your money into an account with a 6%
return. How much...

You are planning to save for retirement over the next 25 years.
To do this, you will invest $3,000 a quarter in a stock account and
$1,000 a quarter in a bond account. These investments will be made
at the beginning of each quarter. The return of the stock account
is expected to be 8%, and the bond account will pay 4%. When you
retire, you will combine your money into an account with a 6%
return. How much can...

You are planning to save for retirement over the next 25 years.
To do this, you will invest $1,000 a month in a stock account and
$700 a month in a bond account. The return of the stock account is
expected to be 11 percent, and the bond account will pay 6 percent.
When you retire, you will combine your money into an account with a
9 percent return. Required: How much can you withdraw each month
from your account...

You are planning to save for retirement over the next 30 years.
To do this, you will invest $1,300 a month in a stock account and
$1,000 a month in a bond account. The return of the stock account
is expected to be 9 percent, and the bond account will pay 4
percent. When you retire, you will combine your money into an
account with a 6 percent return.
Required:
How much can you withdraw each month from your account...

You are planning to save for retirement over the next 25 years.
To do this, you will invest $900 a month in a stock account and
$600 a month in a bond account. The return of the stock account is
expected to be 12 percent, and the bond account will pay 6 percent.
When you retire, you will combine your money into an account with a
9 percent return.
Required:
How much can you withdraw each month from your account...

You are planning to save for retirement over the next 15 years.
To do this, you will invest $600 a month in a stock account and
$300 a month in a bond account. The return of the stock account is
expected to be 10 percent, and the bond account will pay 6 percent.
When you retire, you will combine your money into an account with a
return of 8 percent. How much can you withdraw each month from your
account...

You are planning to save for retirement over the next 30 years.
To do this, you will invest $850 per month in a stock account and
$350 per month in a bond account. The return of the stock account
is expected to be 10 percent per year, and the bond account will
earn 6 percent per year. When you retire, you will combine your
money into an account with an annual return of 7 percent. How much
can you withdraw...

You are planning to save for retirement over the next 35 years.
To do this, you will invest $710 per month in a stock account and
$310 per month in a bond account. The return of the stock account
is expected to be 9.1 percent, and the bond account will earn 5.1
percent. When you retire, you will combine your money into an
account with an annual return of 6.1 percent. Assume the returns
are expressed as APRs.
How much...

You are planning to save for retirement over the next 20 years.
To do this, you will invest $600 a month in a stock account and
$300 a month in a bond account. The return of the stock account is
expected to be 11 percent, and the bond account will pay 6 percent.
When you retire, you will combine your money into an account with a
return of 9 percent. How much can you withdraw each month from your
account...

You are planning to save for retirement over the next 30 years.
To save for retirement, you will invest $1,050 a month in a stock
account in real dollars and $530 per month in a bond account in
real dollars. The effective annual return of the stock account is
expected to be 10 percent, and the bond account will earn 6
percent. When you retire, you will combine your money into an
account with an effective annual return of 8...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 22 minutes ago

asked 31 minutes ago

asked 36 minutes ago

asked 46 minutes ago

asked 56 minutes ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 3 hours ago