Question

A couple wishes to retire in Munich, Germany. The couple will withdraw $10,000 each month in retirement (assume beginning of the month withdrawals). Their money will earn 3.0% APR with monthly compounding in retirement, and they expect retirement to last 30 years. The couple would also like to leave $750,000 to their children at the end of the 30th year in retirement. The couple plans on retiring in 25 years. Currently, they have $200,000 in savings and invest in a mutual fund each quarter that pays a 9% APR (quarterly compounding) on average. What quarterly investment will allow them to reach their goal? (assume end of quarter contributions) $2,899 $2,571 $2,688 $2,269 $2,324

Answer 1

FV(Retirement at End)	$             (750,000.00)
PMT(Withdrawal)	$               (10,000.00)
RATE(Interest Per Month)	0.25%	=3%/12
NPER (Period)	30
PV (Present Value Of Retirement)	$985,273.15	=PV(B3,B4,B2,B1,1)
FV ( Value Required After 25 years)	$985,273.15
RATE(Interest Per Quarter))	2.25%	=9%/4
NPER(Period)	100	=25*4
PMT (Quarterly Investment)	2686	=-PMT(B8,B9,,B7)
2688 Approx	Correct Answer Is C

A D $ $ 1 FV (Retirement at End) 2 PMT(Withdrawal) 3 RATE(Interest Per Month) 4 NPER (Period) 5 PV (Present Value Of Retirement) B с (750,000.00) (10,000.00) 0.25% =3%/12 30 $985,273.15 =PV(B3,B4,B2,B1,1) 6 7 FV (Value Required After 25 years) 8 RATE(Interest Per Quarter)) 9 NPER(Period) 10 PMT (Quarterly Investment) 11 $985,273.15 2.25% =9%/4 100 =25*4 2686 --PMT(B8,89,,B7) Correct Answer Is C 12

А. с - 750000 - 10000 =3%/12 30 =PV(B3,B4,B2,B1,1) =FORMULATEXT(B3) =FORMULATEXT(B5) 1 FV(Retirement at End) 2 PMT(Withdrawal) 3 RATE(Interest Per Month) 4 NPER (Period) 5 PV (Present Value Of Retirement) 6 7 FV ( Value Required After 25 years) 8 RATE(Interest Per Quarter)) 9 NPER(Period) 10 PMT (Quarterly Investment) 11 =B5 =9%/4 =25*4 =-PMT(B8, B9,,B7) Correct Answer Is C =FORMULATEXT(B8) =FORMULATEXT(B9) =FORMULATEXT(B10)

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