Sharon has just retired, and has 400000 dollars in her retirement account. The a

Question

Sharon has just retired, and has 400000 dollars in her retirement account. The account will earn interest at an annual rate of 8 percent, compounded monthly. At the end of each month, Sharon will withdraw a fixed amount to cover her living expenses. Sharon wants her savings to last exactly 30 years. How much money can she withdraw each month? (Give your answer in dollars, correct to the nearest cent.) monthly withdrawal: 2932.7 What is the maximum amount that Sharon can withdraw each month if she wants her savings to last indefinitely? monthly withdrawal: 2666.7 James wants to take out a loan. He can afford to make monthly payments of 300 dollars and wants to pay the loan off after exactly 25 years. What is the maximum amount that James can afford to borrow if the bank charges interest at an annual rate of 10 percent, compounded monthly? (Give your answer, in dollars, correct to the nearest dollar.) amount he can borrow: 33045

Explanation / Answer

Loan Amount 30000 Rate 5% Compounded monthly Period 30 yrs Adjustment for compounding PV 30000 rate 0.4167% (5%/12) Period 360 (30*12) Monthly EMI $161.05 PMT(5%/12,360,-30000)

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