At retirement, Maria's saving account has $620,000 in it and is earning 1.2% compounded monthly.  She decides to make equal monthly withdrawals at the end of each month for the next 20 years.   (a) What monthly withdrawal for the next 20 years will completely exhaust Maria's saving account assuming that the account continues to earn 1.2% compounded monthly? (b) How much interest will her account have earned during these 20 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
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At retirement, Maria's saving account has $620,000 in it and is earning 1.2% compounded monthly.  She decides to make equal monthly withdrawals at the end of each month for the next 20 years.

 

(a) What monthly withdrawal for the next 20 years will completely exhaust Maria's saving account assuming that the account continues to earn 1.2% compounded monthly?

(b) How much interest will her account have earned during these 20 years?

 

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