Question

Asked Sep 23, 2019

I am not quite sure how to structure this question attached. I think that I start by calculating the Future Value of the stock and bond annuities, but I do not know exactly what to do with the withdrawal period part. What exactly is it asking in that part?

Step 1

FV of an annuity can be calculted by excel formula FV. The inputs of this function are:

- Rate = interest rate per period
- Nper = Number of periods
- PMT = Annuity per period
- PV = present value of the money we start with

Step 2

Please see the white board. Please be guided by the second column titled “Linkage” to understand the mathematics. The cells highlighted in yellow contain important figures. Figures in parenthesis, if any, mean negative values. All financials are in $.

Hence, total accumulated value on retirement = FV of Stock acoount + FV of Bond account = $1,689,702.87 + $367,434.81 = $2,057,137.68

Step 3

Amount that can be withdrawn per month can be calculated using the PMT function of excel. Please see the white board. Please be guided by the second column titled “Linkage” to...

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