+1-415-670-9189
info@expertsmind.com
Find the annual withdrawal
Course:- Financial Management
Reference No.:- EM13414




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

Jane Stevens is 30 years old, and she is reviewing her retirement plans.  She currently has $20,000 in a retirement account.  Jane plans to invest another $5,000 in the account today (Year 0), and then increase this amount by 4% per year over the next 40 years (Years 1 through 40).  Therefore she has a 3-year old son, who will attend college in 15 years.  Jane will suspend her contributions for four years while her son is in college, i.e., she will not make any contributions in Years 15, 16, 17, and 18.  Her contribution in Year 19 will be 4% higher than the one in Year 14.

(a) How much will Jane have in her retirement account immediately after she makes her last contribution in Year 40, assuming a return on her investments of 9%?

Account balance at Year 40 =

(b) Jane needs to withdraw a constant amount each year from her account over a 20-year period.  Her first withdrawal will occur at age 71 (Year 41), and the last at age 90.  How much will Jane be able to withdraw each year, assuming a return on her investments of 5% during her retirement years?

Annual withdrawal =




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
If interest parity holds and the interest rate in the U.K. is 6 percent, the interest rate in the US is 4.5 percent, and the one-year forward exchange rate is 1.75 dollars per
Assume the U.S. interest rate is 7.5%, the New Zealand interest rate is 6.5%, the spot rate of the NZ$ is $.52, and the one year forward rate of the NZ$ is $.50. At the end of
The markets in general are paying a 3% real rate of return. Inflation is expected to be 2%. ABC stock commands a 6% risk premium. What is the risk-free rate of return? An inve
An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next four years, respectively. The discount rate is 15 percent. What is the discou
A company you are researching has common stock with a beta of 1.8. Currently, Treasury bills yield 2.5%, and the market portfolio offers an expected return of 10%. What is the
On September 1, 2014, Bylin Company purchased merchandise from Himeji Company of Japan for 20,000,000 yen payable on October 1, 2014. The spot rate for yen was $0.0079 on Sept
If I want to calculate expected return of a company using historical data, what kind of historical data should I use? Where can I get the historical data? does the historical
What is the net present value of a project with a $39,500 initial investment and expected net cash flows of $18,800, $15,400, and $25,700 in each of the next three years, assu