You are planning to save for retirement over the next 25 years. To do this, you

Question

You are planning to save for retirement over the next 25 years. To do this, you will invest $1,200 a month in a stock account and $1,300 a month in a bond account. The return of the stock account is expected to be 10 percent, and the bond account will pay 5 percent. When you retire, you will combine your money into an account with an 8 percent return. Assuming a 15-year withdrawal period, you can withdraw $ each month from your account. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Amount at the end of 25 year = 1200FVIFA(0.8333%,25) + 1300FVIFA(0.4166%,25) = $1592,200.08+ $ 774162.62 = $2,366,362.70

Withdrwal amount each year = 2366,362.70/PVIFA(0.6666%,180) = $22,614.19

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