Question

Ayman has Been working with an ABC he retired today after 30years and the company was   Saving $ 300 monthly for the first 10 years and500 monthly for the next 20 years the interest rate was 6% compounding monthly for the first 5 years and 4% after that . Ayman today is 65 years old . It is planing to start withdrawal next month.
1- if ayman withdrawal 1000 monthly how much will be left when he is 80 years old
2. Suppose Ayman needs $ 2,500 a month, how many he withdraw can he make.

Answer 1

Hi,

Here are the answers with workings.

Answer 1. If Ayman withdraws $1000 per month, he will be left with $163,004.51 when he is 80 years old.( That is 15 years from now or 180 months from now)

Answer 2: If Ayman needs $2500 per month he will be able to withdraw for 106 months.

Note: It is assumed that the corpus of $224,990.26 is reinvested again at 4% compounding interest (less $ 1000 per month or $2500 pr month as the case may be )

Here are the workings.

To calculate the corpus(Total fund accumulated for 30 years) , first 5 years it earns interest at 6% compounded monthly for a monthly investment of $ 300 per month and next 5 years at 4% for $300 invested and remaining 20 years at 4% for a montly investment of $ 500.

Using the FV(Future value) formula in excel, we can calculate the corpus as under.

Corpus accumulated is as under

Here are the excel workings in Excel file

Q# 2 Workings.

Hope this is useful.

All the Best.