Please show your work.Calculating Annuities: You are planning to save for retirement over the next 30 years. To do this, you will invest $850 per month in a stock account and $350 per month in a bond...

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Please show your work.Calculating Annuities: You are planning to save for retirement over the next 30 years. To do this, you will invest $850 per month in a stock account and $350 per month in a bond account. The return of the stock account is expected to be 10 percent per year, and the bond account will earn 6 percent per year. When you retire, you will combine your money into an account with an annual return of 7 percent. How much can you withdraw each month from your account assuming a 25-year withdrawal period?
Answered 4 days AfterMay 18, 2021

Answer To: Please show your work.Calculating Annuities: You are planning to save for retirement over the next...

Harshit answered on May 23 2021
147 Votes
Solution
Conversion of annual rate of return to monthly rate of return:
r (stock) = .10/12 months
= 0.00833
r (bond) = 0.06/12 = 0.005
r (combined) = 0.07/12 = 0.00583
Now, we will calculate future values for the stock value and bond value for next 30 years.
FV (Stock) = 850 [{1 + (10%/12) ^...
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