Continuing the scenario from question 3: Assume you have chosen to invest the $1,000 monthly contributions at the end of each month. Once retired, you will adjust your investment allocation to be more conservative and expect to average a 4% return on the account each year, compounded monthly. While retired, you plan to draw $5,000 from the account at the end of each month to go towards living expenses. You expect your lifespan in retirement to be 30 years. A. How much money will you need to have at the beginning of retirement to fund the $5,000 monthly withdrawals for 30 years? B. How many months could $5,000 be withdrawn before the account would be out of money?
Continuing the scenario from question 3: Assume you have chosen to invest the $1,000 monthly contributions at the end of each month. Once retired, you will adjust your investment allocation to be more conservative and expect to average a 4% return on the account each year, compounded monthly. While retired, you plan to draw $5,000 from the account at the end of each month to go towards living expenses. You expect your lifespan in retirement to be 30 years. A. How much money will you need to have at the beginning of retirement to fund the $5,000 monthly withdrawals for 30 years? B. How many months could $5,000 be withdrawn before the account would be out of money?
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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Question
Continuing the scenario from question 3: Assume you have chosen to invest the $1,000
monthly contributions at the end of each month. Once retired, you will adjust your investment
allocation to be more conservative and expect to average a 4% return on the account each year,
compounded monthly. While retired, you plan to draw $5,000 from the account at the end of
each month to go towards living expenses. You expect your lifespan in retirement to be 30
years.
A. How much money will you need to have at the beginning of retirement to fund the $5,000
monthly withdrawals for 30 years?
B. How many months could $5,000 be withdrawn before the account would be out of money?
Transcribed Image Text:3) (10%) As the owner of a successful and profitable company, you plan to retire in 25 years. To
fund your retirement, you will start putting $1,000 into an investment account at the end of
each month until retirement.
A. If you expect the account to average a 7% return, compounded monthly, how much money
will be in the account when you reach retirement?
B. How much money will be in the account if the $1,000 monthly contributions are made at
the beginning of each month?
4) (10%) Continuing the scenario from question 3: Assume you have chosen to invest the $1,000
monthly contributions at the end of each month. Once retired, you will adjust your investment
allocation to be more conservative and expect to average a 4% return on the account each year,
compounded monthly. While retired, you plan to draw $5,000 from the account at the end of
each month to go towards living expenses. You expect your lifespan in retirement to be 30
years.
A. How much money will you need to have at the beginning of retirement to fund the $5,000
monthly withdrawals for 30 years?
B. How many months could $5,000 be withdrawn before the account would be out of money?
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