Withdraw each year in your retirement

Assignment Help Financial Management

Reference no: EM131010890

You are planning your retirement in 10 years. You currently have $165,000 in a bond account and $605,000 in a stock account. You plan to add $7,500 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 10.75 percent and the bond account will earn a return of 7.25 percent. 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 6.5 percent.

Required:

How much can you withdraw each year in your retirement?

Reference no: EM131010890

Questions Cloud

What is bond equivalent and discount yields on investment : Treasurer invest $20 million in excess short-term cash in money market investment. The prospectus quotes the instrument true yield of 3.15%, that is, the EAR for this investment is 3.15%. Treasurer wants to know the money market yield on investment t..

Profitable networking opportunities : A Virginia-based entrepreneur believes that joining Kinloch Golf Club will allow for profitable networking opportunities, thus improving her business. But she wonders if it is worth the costs of joining. Ignore any utility she receives from the enjoy..

Coupon rate must bonds offer in order to sell at face value : General Matter’s outstanding bond issue has a coupon rate of 8.2%, and it sells at a yield to maturity of 7.25%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at face..

Savings and loan offering an introductory rate : You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 3.3 percent per year, compounded monthly for the first six months, increasing thereafter to 18.2 percent compounded monthly. Assuming you transfe..

Withdraw each year in your retirement : You are planning your retirement in 10 years. You currently have $165,000 in a bond account and $605,000 in a stock account. You plan to add $7,500 per year at the end of each of the next 10 years to your bond account. How much can you withdraw each ..

Bank account to cover college expenses : Beginning three months from now, you want to be able to withdraw $2,900 each quarter from your bank account to cover college expenses over the next four years. If the account pays .69 percent interest per quarter, how much do you need to have in your..

What is the internal rate return of the fix asset : One business want to buy a computer size system that cost $15,000 and it has a utility life of 9 years. The system would generate a cash flow after tax of $2,205.25 each year. What is the internal rate return of the fix asset?

Compute the future value in year : Compute the future value in year 9 of a $3,000 deposit in year 1 and another $2,500 deposit at the end of year 5 using a 9 percent interest rate. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

What is the present value of income stream : At a constant interest rate of 15%, compounded annually, what is the present value of an income stream paying $50 next quarter and growing at 2% per quarter until the end of the third year? From that point on it grows at 1% per quarter indefinitely.

User Account

All Pages