You plan on saving $10,000 a year (as a regular annuity) for the next 30 years. You...

You plan on saving $10,000 a year (as a regular annuity) for the next 30 years. You will then make equal withdrawals for each of the next 25 years (also a regular annuity). If the interest rate is 10% over the first 30 years but only 8% for the remaining 25 years, what will be the amount of each withdrawal?

Place answer in the box below and use 2 decimals.

Solutions

Expert Solution

rate positively ..

This is two step problem-
Step1 computation of future value after 30 year.
we have to use financial calculator to solve this
Put in calculator

PV		0
PMT		-10,000
I		10%
N		30

Compute FV		$1,644,940.23


Step 2 - Computation of annual amount of withdrawal

We have to use financial calculator again
Put in calculator

FV		0
PV		($1,644,940.23)
I		8%
N		25

Compute PMT	$154,095.99

Ans =		$154,095.99

jeff jeffy answered 2 years ago

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