+1-415-670-9189
info@expertsmind.com

# Get Solution

Find the annual withdrawal
Course:- Financial Management
Reference No.:- EM13414

 Tweet

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 =

Minimize

Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
 You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be \$440 per unit and sales vol Clay LLC placed in service machinery and equipment (7-year property) with a basis of \$2,310,000 on June 6, 2015. Assume that Clay has sufficient income to avoid any limitation The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. The firm can sell new \$1000 par value bonds with a 15-year maturity a In 2008, Chester Corporation granted Pauline Oxblood a nonqualified option to purchase 3,000 shares of Chester stock for \$13 per share. On date of grant, the market price was Price, Inc., is considering an investment of \$378,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual cash revenues and expenses at th As a result of this class, you have become an experienced and avid international investor. On the Paris Stock Exchange, Air France-KLM stock closed at EUR11.20 per share on Fr Drongo Corporation's 3-year bonds yield 5.22%. The real risk-free rate is 2.21%. The maturity risk premium is estimated to be 0.07%(t-1), where t is equal to the time to matur You have employer-sponsored retirement plan. Assume, your age is 35 and you plan to retire at 65. You can contribute \$3,600 per year to this plan. Your employer will match thi