Jordan has $6000 to invest in an account from which he plans to make regula withdrawals over the next 3 years. He is considering two options. • Option A: Withdrawals are made every quarter and interest is earned at rate of 8% compounded quarterly. • Option B: Withdrawals are made every month and interest is earned at c rate of 7.75% compounded monthly. a) Determine the regular withdrawals for each option.

Jordan has $6000 to invest in an account from which he plans to make regula withdrawals over the next 3 years. He is considering two options. • Option A: Withdrawals are made every quarter and interest is earned at rate of 8% compounded quarterly. • Option B: Withdrawals are made every month and interest is earned at c rate of 7.75% compounded monthly. a) Determine the regular withdrawals for each option.

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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You are working for a finance firm and a client comes to you and wants to know how much money they should put in an annuity (which earns 2.885% interest compounded quarterly) at the end of each three months for the next 36 years. Their goal is that when they retire at the end of 36 years, they would like the quarterly withdrawals from the annuity to total $68,000 per year and that the annuity is to last for the next 23 years. You are to determine the amount which your client needs to deposit into the annuity at the end of each three months for the next 36 years so that they can meet their retirement goal. Do the following: Show all your work that you used to answer this problem. Label the steps and important values as you solve the problem. Note that when you use the TVM Solver, show the all variables and the values you entered (into the variables) and solved for. Find the total amount of interest client will earn (from the time they start contributing to the account to when they…
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Jordan has $6000 to invest in an annuity from which he plans to make regular withdrawals over the next 3 years. he is considering tow options: Option A: Withdrawals are made every quarter and interest is earned at a rate of 8% compounded quarterly. Option B: Withdrawals are made every month and interest is earned at a rate of 7.75%, compounded monthly. (a) Determine the regular withdrawal for each option. (b) Determine the total interest earned for each option.
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