Question

You are planning to save for retirement over the next 30 years. To do this, you will invest $900 a month in a stock account and $600 a month in a bond account. The return of the stock account is expected to be 8 percent, and the bond account will pay 5 percent. When you retire, you will combine your money into an account with a return of 6 percent. How much can you withdraw each month from your account assuming a 15-year withdrawal period

Answer 1

Answer:

$15,533.69

Explanation:

the future value of your stock account = $900 x 1,490.48048 (FV annuity factor, 0.6667%, 360 periods) = $1,341,432.43

the future value of your bond account = $600 x 832.32019 (FV annuity factor, 0.4167%, 360 periods) = $499,392.11

after 30 years, the balance of your 2 accounts = $1,840,824.54

the monthly withdrawal = $1,840,824.54 / 118.50531 (PV annuity factor, 0.5%, 180 periods) = $15,533.69