Question

please show calculations and a timeline if possible

73 8. I plan to retire in 20 years. I currently have $150,000 saved up. I will invest $1000 at the 74 beginning of every month in the account. If I earn 10% a year over the next ten years and then 75 12% a year over the remaining 10 years, how much will I have for retirement? At retirement 76 transfer all the money into assets that earn only 7% a year. If I start withdrawing $10,000 at the 77 end of every month during retirement, how long before I run out of money? Explain your 78 answer. 85 9. A recent college grad begins to invest $200 a month in a fund that earns 12% a year with 86 monthly compounding. How much will she have after 35 years? What is the present value of that 87 amount? If she had started with the same initial investment but increased the monthly amount by 88 0.5% each month, how long would it take her to have the same future value? (6 points)

Answer 1

Current funds available are $150,000

Also at the beginning of every month $1000 may be invested.

Compute the amount that would be available in the account after 10 years in the following manner:

Rate of interest is 10%

Number of years is 10

Present Value is $150,000

Payment at the beginning is $1000

Compute the future value using the excel after 10 years and then for next 10 years as well

A Amount 150000 0.1 1 Particulars 2 Present Value 3 Rate of interest 4 Years 5 Periods 6 Payment 7 Future Value after 10 years from now 10 =B4*12 1000 =-FV(B3/12, B5,B6,B2,1) =B7 0.12 9 Future value of today will be equal to the present value after 10 year 10 11 Present Value 12 Rate of interest 13 Years 14 Periods 15 Payment 16 Future Value after 20 years from now 10 =B13*12 1000 =-FV(B12/12, B14,115,111,1) 17 18 After 20 years 19 Present value 20 Payment withdrawn at the end of each month 21 Rate of interest 22 Number of periods 23 Approximately in months 24 Years 25 After two years of retirement there will not be any money left. 26 Which means 22 years from now 2254183.3 100000 0.07 =NPER(B21/12,B20,-B19) Approximately 2 years

The result will be as follows:

Amount $150,000 10% 1 Particulars 2 Present Value 3 Rate of interest 4 Years 5 Periods 6 Payment 7 Future Value after 10 years from now 120 $1,000 $612,608.24 9 Future value of today will be equal to the present value after 10 year 10 11 Present Value $612,608 12 Rate of interest 12% 13 Years 14 Periods 120 15 Payment $1,000 16 Future Value after 20 years from now $2,254,183.30 10 17 17% 18 After 20 years 19 Present value 2254183.3 20 Payment withdrawn at the end of each month 100000 21 Rate of interest 22 Number of periods 24.23856172 23 Approximately in months 24 24 Years Approximately 2 years 25 After two years of retirement there will not be any money left. 26 Which means 22 years from now