I need help with this finance question, please show all steps! You are planning
ID: 2650621 • Letter: I
Question
I need help with this finance question, please show all steps!
You are planning to save for retirement over the next 30 years. To do this, you will invest $720 a month in a stock account and $320 a month in a bond account. The return of the stock account is expected to be 9.2 percent, and the bond account will pay 5.2 percent. When you retire, you will combine your money into an account with an 6.2 percent return.
How much can you withdraw each month from your account assuming a 25-year withdrawal period?
You are planning to save for retirement over the next 30 years. To do this, you will invest $720 a month in a stock account and $320 a month in a bond account. The return of the stock account is expected to be 9.2 percent, and the bond account will pay 5.2 percent. When you retire, you will combine your money into an account with an 6.2 percent return.
How much can you withdraw each month from your account assuming a 25-year withdrawal period?
Explanation / Answer
Amount Available at the time of retirement = FV of Stock + Fv of Bond
Amount Available at the time of retirement = fv(rate,nper,pmtpv) + fv(rate,nper,pmtpv)
Amount Available at the time of retirement = fv(9.2%/12,360,720,0) + fv(5.2%/12,360,320,0)
Amount Available at the time of retirement = $ 1650753.37
Monthly Withdrawl = pmt(rate,nper,pv,fv)
Monthly Withdrawl = pmt(6.2%/12,300,-1650753.37,0)
Monthly Withdrawl = $ 10838.55
Answer
Monthly Withdrawl = $ 10838.55