You are planning your retirement in 10 years. You currently have $164,000 in a bond account and $604,000 in a stock account. You plan to add $7,600 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 10.5 percent and the bond account will earn a return of 7 percent. When you retire, you plan to withdraw an equal amount for each of the next 21 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 6.25 percent. Required: How much can you withdraw each year in your retirement? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) (Hint: Calculate the balances in both accounts at retirement, sum, put this number in as PV and calculate the PMT that will deplete this account.) Annual withdrawal amount

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Raghubhai 

You are planning your retirement in 10 years. You currently have $164,000 in a bond
account and $604,000 in a stock account. You plan to add $7,600 per year at the end of
each of the next 10 years to your bond account. The stock account will earn a return of
10.5 percent and the bond account will earn a return of 7 percent. When you retire, you
plan to withdraw an equal amount for each of the next 21 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 6.25 percent.
Required:
How much can you withdraw each year in your retirement? (Enter rounded answer as
directed, but do not use rounded numbers in intermediate calculations.Round your
answer to 2 decimal places (e.g., 32.16).) (Hint: Calculate the balances in both
accounts at retirement, sum, put this number in as PV and calculate the PMT that will
deplete this account.)
Annual withdrawal
amount
SA
Transcribed Image Text:You are planning your retirement in 10 years. You currently have $164,000 in a bond account and $604,000 in a stock account. You plan to add $7,600 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 10.5 percent and the bond account will earn a return of 7 percent. When you retire, you plan to withdraw an equal amount for each of the next 21 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 6.25 percent. Required: How much can you withdraw each year in your retirement? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) (Hint: Calculate the balances in both accounts at retirement, sum, put this number in as PV and calculate the PMT that will deplete this account.) Annual withdrawal amount SA
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