Question

5 pts D | Question 20 Ashley turned 30 today, and she is planning to save $3,000 per year for retirement, with the frst deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 8.90% per year throughout her lifetime. She plans to retire 35 years from today when she turns 65, and she expects to live for 30 years after retirement, to age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year, and she plans on leaving no money to her beirs. Your answer should be between 28,800.00 and 95,225.00, rounded to 2 decimal places, with no special characters No new data to save. Last checked at 11:22amSubmit Quiz MacBook Pro 20 5 7 9 Ul

Answer 1

Amount at the time she retires = 3,000*[{(1+0.089)³⁵-1}/0.089]

= $632,649.25

Let the amount withdrawn each year be x

X*PVAF(8.9%, 30 years) = 632,649.25

10.288x = 632,649.25

X = $61,493.90

Hence, amount that can be spent each year = $61,493.90