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Click here to read the eBook: Future Value of an Ordinary Annuity Click here to read the eBook: Finding Annulty Paryments, Periods, and Interest Rates Your cient i, 40 years Od. She want, to begn uing for retirement, with-e frt payment to come one year from now. Se can srve S9,000 per yea, and you advise her be isnt " nthe stock 10 c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her age? Round your answers to the nearest cent continue ts earn the same rate, how much will she be able to withdraw at the end of Check My Work 6 MacBook Air 7 2 3 5 6 8

Explanation / Answer

Answer a.

Annual Deposit = $9,000
Annual Interest Rate = 9%
Time to Retirement = 25 years

Accumulated Balance = $9,000 * FV of an Ordinary Annuity of $1 (9%, 25)
Accumulated Balance = $9,000 * 84.7009
Accumulated Balance = $762,308.10

Answer b.

Annual Deposit = $9,000
Annual Interest Rate = 9%
Time to Retirement = 30 years

Accumulated Balance = $9,000 * FV of an Ordinary Annuity of $1 (9%, 30)
Accumulated Balance = $9,000 * 136.3075
Accumulated Balance = $1,226,767.50

Answer c.

If she retires at 65:

Accumulated Balance = $762,308.10
Annual Interest Rate = 9%
Period after retirement = 20 years

Annual Withdrawal = $762,308.10 / PV of an Ordinary Annuity of $1 (9%, 20)
Annual Withdrawal = $762,308.10 / 9.1285
Annual Withdrawal = $83,508.58

If she retires at 70:

Accumulated Balance = $762,308.10
Annual Interest Rate = 9%
Period after retirement = 15 years

Annual Withdrawal = $1,226,767.50 / PV of an Ordinary Annuity of $1 (9%, 15)
Annual Withdrawal = $1,226,767.50 / 8.0607
Annual Withdrawal = $152,191.19

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