Question

Finance problems thx!

5. You are planning your retirement in 10 years. You currently have $200,000 in a bond account and $400,000 in a stock account. The stock account will earn an 11.5% return and the bond account will earn a 7.5% return. When you retire, you plan to withdraw an equal amount for each of the next 25 years at the end of each year and have nothing left. Additionally, when you retire you will transfer your money to an account that earns 6.75%. How much can you withdraw each year?

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

v ' ** 05-22 : ENG 23-02-2020 13 EY279 - X Fax EY - EZ FA FB - FC FC FC FE FE a 279 280 281 STEP 1 283 284 285 BOND ACCOUNT PRESENT SAVINGS RATE YEARS 200000 PV 7.50% r 10 n 286 287 288 289 290 291 FUTURE VALUE = FUTURE VALUE = FUTURE VALUE = PV*(1+r)^n 200000*(1+0.075)^10 412206.31 STEP 2 292 293 294 STOCK ACCOUNT PRESENT SAVINGS RATE YEARS 400000 PV 11.50% r 10 n 295 296 297 298 FUTURE VALUE = FUTURE VALUE = FUTURE VALUE = PV*(1+r)^n 400000*(1+0.115)-10 1187978.73 299 300 301 STEP 3 TOTAL ACCUMULATED VALUE 1600185.04 302 ... CAP STRU VALUE PM, PMT loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPO NPER APR CPI ear FVA 52 pva 53 STATE 56 ... :

1 Ale W ? v . 1 05-22 ENG 23-02-202013 EY323 : five EY EZ FA FB FC FD FE FE 300 STEP 3 TOTAL ACCUMULATED VALUE 1600185.04 NOW ABOVE AMOUNT WILL BECOME "RETIREMENT MONEY = PV" 305 306 PRESENT VALUE RATE YEARS 1600185.04 6.75% 307 308 309 310 311 PV = 1600185.04 = 1600185.04 = ANSWER PMT = ANNUAL WITHDRAWAL = PMT*(1/r)*(1-(1/(1+r)^n)) PMT*(1/0.0675)*(1-(1/(1+0.0675)^25)) PMT*11.92081076 134234.58 312 313 314 315 316 317 318 319 320 321 322 323 ... CAP STRU VALUE PM, PMT loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPO NPER APR CPI ear FVA 52 pva 3 STATE 56 ... :