In: Finance
You are planning for your retirement and have decided the following: you will retire in 35 years and will make monthly deposits into your retirement account of $400 for the next 15 years and then monthly deposits of $800 for the remaining 20 years until retirement. This account earns a 7% rate of return, compounded monthly. In addition, you will inherit $50,000 7 years from today. The inheritance will be deposited into an account that will earn 10% per year until year 20 and then 15% per year after that (compounded annually). You expect to live 35 years past retirement and wish to make equal monthly withdrawals from your account. How much will you be able to withdraw each month if the account that holds your retirement money makes a 3% return, compounded monthly? $7,497.24 $11,139.82 $9,300.50 $8,979.94
$8,979.94 is the answer
Future value of $400 deposits deposited for 35 years |
$720,421.84 |
Future value of the additional $400 deposited for 20 years |
$208,370.66 |
Future
value of $50,000 inhertited after 7 years till year 20 |
$172,613.56 |
Future value of above at retirement | $1,404,567.18 |
Total funds at retirement | $2,333,359.69 |
Amount that can be withdrawn | $8,979.94 |
WORKINGS