year from now), in an account paying 8% interest per year. You will make your last deposit 30 years from now when you retire at age 65. During retirement, you plan to withdraw funds from the account at the end of each year (so you first withdrawal is at age 66). What constant amount will you be able to withdraw each year if you want the funds to last until you are 90?
year from now), in an account paying 8% interest per year. You will make your last deposit 30 years from now when you retire at age 65. During retirement, you plan to withdraw funds from the account at the end of each year (so you first withdrawal is at age 66). What constant amount will you be able to withdraw each year if you want the funds to last until you are 90?
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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Hi,
How do I solve for the 2
Thanks
![4. You are 35 years old, and decide to save $5000 each year (with the first deposit one
year from now), in an account paying 8% interest per year. You will make your last
deposit 30 years from now when you retire at age 65. During retirement, you plan to
withdraw funds from the account at the end of each year (so you first withdrawal is at
age 66). What constant amount will you be able to withdraw each year if you want
the funds to last until you are 90?
[Hint: 2 annuities]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff0a8a8b2-22c4-42fd-96b3-e86c4fe33385%2F9b35008f-a15a-4efe-b4e0-50d2d872c0b6%2F76n873g_processed.png&w=3840&q=75)
Transcribed Image Text:4. You are 35 years old, and decide to save $5000 each year (with the first deposit one
year from now), in an account paying 8% interest per year. You will make your last
deposit 30 years from now when you retire at age 65. During retirement, you plan to
withdraw funds from the account at the end of each year (so you first withdrawal is at
age 66). What constant amount will you be able to withdraw each year if you want
the funds to last until you are 90?
[Hint: 2 annuities]
Expert Solution
Step 1
Information Provided:
- Savings each year = $5000 (From age 35 to 65)
- Interest rate = 8%
- Period from age 35 to 65 = 30 years
- Period from age 66 to 90 = 25 years
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