Being preoccupied with your retirement income, you start planning to save money for retirement over the next 20 years. You plan to invest in two investment vehicles: stocks and bonds. You will thus invest $600 i month in the stock account and $300 a month in the bond account (your monthly investment would thus be used to purchase stocks and bonds for $600 and 5300 respectively). The stock account is expected earn 12% per year (corresponding to a monthly rate of 12%/12 per month), and the bond account is expected to cour 1% per year (corresponding to a monthly rate of 8%/12 per month. When you retire, you will combine your money into an account with a 6 percent return per year (corresponding to a monthly rate of 6%/12 per a) What is the value of the stock account 20 years from now? b) What is the value of the bond account 20 years from now? c) What is value of the combined stock and bond accounts 20 years from now? d) How much can you withdraw each month from your account after retirement assuming a 25-year withdrawal.
Being preoccupied with your retirement income, you start planning to save money for retirement over the next 20 years. You plan to invest in two investment vehicles: stocks and bonds. You will thus invest $600 i month in the stock account and $300 a month in the bond account (your monthly investment would thus be used to purchase stocks and bonds for $600 and 5300 respectively). The stock account is expected earn 12% per year (corresponding to a monthly rate of 12%/12 per month), and the bond account is expected to cour 1% per year (corresponding to a monthly rate of 8%/12 per month. When you retire, you will combine your money into an account with a 6 percent return per year (corresponding to a monthly rate of 6%/12 per
a) What is the value of the stock account 20 years from now?
b) What is the
c) What is value of the combined stock and bond accounts 20 years from now?
d) How much can you withdraw each month from your account after retirement assuming a 25-year withdrawal.
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