Question

In: Accounting

Ayman has Been working with an ABC he retired today after 30years and the company was ...

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.

Expert Solution

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.

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