Different savings plans-which one used the better strategy

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Reference no: EM13906727

John and twin sister June have different savings plans. John starts investing with a $7,000 deposit today, and will add $7,000 at the end of each of the next 8 years (for a total of 9 deposits). June invests $12,000 starting in 2 years, and will add $12,000 at the end of each of years 4, 6, 8 and 10 (for a total of 5 deposits of 12k each). Both siblings plan to withdraw $5,500 at the EOY 20 to buy there patents a nice anniversary gift. Assume they earn 6% annual interest.

a) For each cash flows explained above, how much will each sibling have in their investment account at the end of year 25? Which one used the better strategy?

b) John plans to withdraw $25k at the end of each year starting with a withdrawal at EOY 26. How long will John be able to make these 25k annual withdrawals until he has no money left in his account?

Reference no: EM13906727

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