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You are saving for retirement. Starting this month, you will deposit $600 per month into a...

  1. You are saving for retirement. Starting this month, you will deposit $600 per month into a stock account that earns 9% interest. In ten years, you will begin depositing an additional $350 per month into a bond account that earns 6% interest. You expect interest rates to shift upwards 1.5% 20 years from now. This means, at that point, each of the accounts listed above will earn interest 1.5% higher than before. How much will you have when you retire if you plan to retire in 37 years?

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Expert Solution

Stock account
FV after 20 years $400,732.12
FV after 37 years $2,706,649.60
Bond Account
FV after 20 years $57,357.77
FV after 37 years $348,067.15
Total amount on retirement $3,054,716.75

jeff jeffy answered 2 months ago
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