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age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year, and she plans on leaving no money to her heirs.

age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year, and she plans on leaving no money to her heirs.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Ashley turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 9.30% per year throughout her lifetime. She plans to retire 35 years from today, when she turns 65, and she expects to live for 30 years after retirement, to age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year, and she plans on leaving no money to her heirs. Your answer should be between 28,800.00 and 95,225.00, rounded to 2 decimal places, with no special characters.
Transcribed Image Text:Ashley turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 9.30% per year throughout her lifetime. She plans to retire 35 years from today, when she turns 65, and she expects to live for 30 years after retirement, to age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year, and she plans on leaving no money to her heirs. Your answer should be between 28,800.00 and 95,225.00, rounded to 2 decimal places, with no special characters.
Expert Solution
Step 1

Future Value of your investment

Annual deposit = $3000

No of years = 35

Rate = 9.30%

Future Value=PV * (1+r)n

Here PV is the Present value

r is Rate and n is time i.e. no of years

Hence 

     FV = $692751.90

 

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