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11. Consider a retirement planning account where you want to be able to withdraw $3500 each month for 25 years assuming your

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Answer #1

Information provided:

Monthly withdrawal= $3,500

Time= 25 years*12= 300 months

Interest rate= 9.25%/12= 0.7708% per month

The question is concerning finding the present value of an annuity due. Annuity due refers to annuity that occurs at the beginning of a period.

This can be solved using a financial calculator by inputting the below into the calculator:

The financial calculator is set in the end mode. Annuity due is calculated by setting the calculator to the beginning mode (BGN). To do this, press 2nd BGN 2nd SET on the Texas BA II Plus calculator.

Enter the below in a financial calculator in BGN mode:

PMT= 3,500

N= 300

I/Y= 0.7708

Press the CPT key and PV to compute the present value of an annuity due.

The value obtained is 411,846.56.

Therefore, I will need $411,846.56 in my account at the beginning.

In case of any query, kindly comment on the solution.

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