When 40-year-old Barney retires at age 62 his retirement account, which pays 6.6% compounded monthly, will be worth $1252000.
a) How much can be withdrawn monthly, starting one month after retirement, such that he completely exhausts the principal by age 92? $
b) Assuming inflation is 3% annually, how much is his first withdrawal in today's dollars? $
2007-11-28 13:31:24 · 5 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
a)$ 7996.01
b) Oops this was wrong. This is the right answer $4136.15
2007-11-28 13:40:46 · answer #1 · answered by moonman 6 · 0⤊ 0⤋
A) solve for a FV of zero, 30 years in the future, use 6.6% rate.
b) Discount the cash stream using the 3% rate.
This was covered in class.
2007-11-28 22:00:33 · answer #2 · answered by Anonymous · 0⤊ 0⤋
This sound like a homework problem. Most companies have a workshop for their employees that will be retiring within two years. Check with your personnel department.
Who knows if he will still be working there in twenty-two years.
2007-11-28 21:37:30 · answer #3 · answered by LADY AT THE LAKE 3 · 0⤊ 1⤋
Open you textbook. Find "Present Value" tables for and "Ordinary Annuity". That will answer a). "Present Value" of $1 will answer b).
If you need more help, ask your professor to help you find a tutor.
2007-11-28 21:39:21 · answer #4 · answered by STEVEN F 7 · 0⤊ 0⤋
this is a very good homework question so should be posted over there in the homework section!!!
2007-12-02 17:01:03 · answer #5 · answered by mister ed 7 · 0⤊ 0⤋