You are trying to plan for retirement in 10 years and currently you have $150,000 in a savings account and $250,000 in stocks. In addition, you plan to deposit $8,000 per year into your savings account at the end of each of the next five years, and then $10,000 per year at the end of each year for the final five years until you retire. a. Assuming your savings account returns 8 percent compounded annually, and your investment in stocks will return 12 percent compounded annually, how much will you have at the end of 10 years? b. If you expect to live for 20 years after you retire, and at retirement you deposit all of your savings in a bank account paying 11 percent, how much can you withdraw each year after you retire (making 20 equal withdrawals beginning one year after you retire) so that you end up with a zero balance at death?

You are trying to plan for retirement in 10 years and currently you have $150,000 in a savings account and $250,000 in stocks. In addition, you plan to deposit $8,000 per year into your savings account at the end of each of the next five years, and then $10,000 per year at the end of each year for the final five years until you retire. a. Assuming your savings account returns 8 percent compounded annually, and your investment in stocks will return 12 percent compounded annually, how much will you have at the end of 10 years? b. If you expect to live for 20 years after you retire, and at retirement you deposit all of your savings in a bank account paying 11 percent, how much can you withdraw each year after you retire (making 20 equal withdrawals beginning one year after you retire) so that you end up with a zero balance at death?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter4: Managing Your Cash And Savings

Section: Chapter Questions

Problem 7FPE: Calculating interest earned and future value of savings account. If you put 6,000 in a savings...

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