William North has just inherited $895,000 which he would like to use as part of his retirement nest egg. nvested the funds at a 6.28 percent annual rate compounded annually. William will reach age sixty in 10 and will retire early. Now he would like to know how much he could withdraw from the fund in equal nstallments at the end of each year from the year he reaches age 60 until he reaches age 70¹2, the year must start withdrawing funds from his individual retirement account (IRA). William assumes the funds wi continue to earn at a 6.28 percent annual rate. In other words, William would like to know the annual yea payment from an eleven-year annuity (from age 60 to the year he will be 70%), earning 6.28 percent an Round the answer to two decimal places.

William North has just inherited $895,000 which he would like to use as part of his retirement nest egg. nvested the funds at a 6.28 percent annual rate compounded annually. William will reach age sixty in 10 and will retire early. Now he would like to know how much he could withdraw from the fund in equal nstallments at the end of each year from the year he reaches age 60 until he reaches age 70¹2, the year must start withdrawing funds from his individual retirement account (IRA). William assumes the funds wi continue to earn at a 6.28 percent annual rate. In other words, William would like to know the annual yea payment from an eleven-year annuity (from age 60 to the year he will be 70%), earning 6.28 percent an Round the answer to two decimal places.

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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A woman is planning for retirement in 30 years and decides she can deposit $6,000 each year on December 31 into a retirement savings plan that she expects will pay 6% interest. In 20 years she also expects to receive a small inheritance of $12,000 that she can also put into her retirement fund. The woman anticipates that her retirement fund will need to last 20 years; she estimates that she will need $60,000 at the end of each year in retirement to cover her living expenses. Her plan is flawed. How much extra does she need to save every year (rounded to dollars and cents) to achieve her goals? (Do not round interim calculations)
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