Question

You are planning to save for retirement over the next 25 years. To do this, you will invest $820 per month in a stock account and $420 per month in a bond account. The return of the stock account is expected to be 10.2 percent, and the bond account will pay 6.2 percent. When you retire, you will combine your money into an account with a 7.2 percent return. How much can you withdraw each month from your account assuming a 20-year withdrawal period? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

The withdraw amount is "11,227.42".

Step-by-step explanation:

The given values are:

In stock account,

PMT = $820

Interest rate =
`(10.2 \ percent)/(12)`

N = 300

PV = 0

In Bond account,

PMT = $420

Interest rate =
`(6.2 \ percent)/(12)`

N = 300

PV = 0

Now,

By using the FV (Future value) function, the value in Stock account will be:

=
`FV(rate,nper,pmt,[pv],[type])`

=
`1,125,795.30`

By using the FV (Future value) function, the value in Stock account will be:

=
`FV(rate,nper,pmt,[pv],[type])`

=
`300,181.3321`

After 25 years,

The value throughout the account, will be:

=
`300,181.3321 + 1,125,795.30`

=
`1,425,976.63`

By using the PMT function, we can find the with drawling amount. The amount will be:

=
`PMT(rate, nper, pv, [fv], [type])`

=
`11,227.42`