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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% compounded monthly, and the bond account will pay 6% compounded monthly. When you retire, you will combine your money into an account with a return of 5% compounded monthly. How much can you withdraw each month from your account assuming a 25-year withdrawal period?

Respuesta :

jepessoa

Answer:

$13,287.70

Explanation:

first we must calculate the future value:

future value of stock account = $850 x [(1 + 0.1/12)³⁶⁰ - 1 ] / (0.1/12) = $1,921,415

future value of bond account = $350 x [(1 + 0.06/12)³⁶⁰ - 1 ] / (0.06/12) = $351,580

total future value = $2,272,995

monthly withdrawal = value of account / PVIFA

PVIFA, 300 periods, 0.4167% = [1 - 1/(1 + 0.05/12)³⁰⁰] / (0.05/12) = 171.06

monthly withdrawal = $2,272,995 / 171.06 = $13,287.70

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