Suppose that for retirement purposes, over the course of 27 years, you make monthly deposits of $480.00 into an ordinary annuity that pays an annual interest rate of 4.954% compounded monthly. After those 27 years, you then want to make monthly withdrawals for 28 years, reducing the balance in the account to zero dollars. a) Find the amount of money you have accumulated in the annuity over the first 27 years: b) How much should you withdrawing monthly from your account so that the balance reaches zero dollars after the final 28 years? (Note: Your answers should have a dollar sign and be accurate to two decimal places)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 24P
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Suppose that for retirement purposes, over the course of 27 years, you make monthly deposits of $480.00 into an ordinary
annuity that pays an annual interest rate of 4.954% compounded monthly. After those 27 years, you then want to make monthly
withdrawals for 28 years, reducing the balance in the account to zero dollars.
a) Find the amount of money you have accumulated in the annuity over the first 27 years:
b) How much should you withdrawing monthly from your account so that the balance reaches zero dollars after the final 28 years?
(Note: Your answers should have a dollar sign and be accurate to two decimal places)
Transcribed Image Text:Suppose that for retirement purposes, over the course of 27 years, you make monthly deposits of $480.00 into an ordinary annuity that pays an annual interest rate of 4.954% compounded monthly. After those 27 years, you then want to make monthly withdrawals for 28 years, reducing the balance in the account to zero dollars. a) Find the amount of money you have accumulated in the annuity over the first 27 years: b) How much should you withdrawing monthly from your account so that the balance reaches zero dollars after the final 28 years? (Note: Your answers should have a dollar sign and be accurate to two decimal places)
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