Question

1. On the day you retire, you will have $389,900 in your retirement savings. You expect to earn 4.5 percent, compounded monthly, and live 24 more years. How much can you withdraw from your savings each month during your retirement?

A. $754.16

B. $751.35

C. $2,208.01

D. $2,072.00

E. $2,216.28

2.

You are retired, have $264,500 in your savings, withdraw $2,000 each month, and earn 4.5 percent, compounded monthly. How long will it be until you run out of money?

13.67 years

15.25 years

22.08 years

183.02 years

18.78 years

Answer 1

1)

	Withdaw in each month (P)	PVA÷([1-(1÷(1+r)^n)]÷r)
	Here,
A	Interest rate per annum	4.50%
B	Number of years	24
C	Number of compoundings per per annum	12
A÷C	Interest rate per period ( r)	0.38%
B×C	Number of periods (n)	288
	Present value (PVA)	$                                                 389,900.00
	Withdaw in each month (P)	$               2,216.28
		389900÷((1-(1÷(1+0.38%)^288))÷0.38%)