You estimate you need to supplement your social security payments with monthly withdrawals of $1,400.00 per month from a private investment account during the first 23 years of your retirement. Assuming you can earn annual returns of 5.2% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
You estimate you need to supplement your social security payments with monthly withdrawals of $1,400.00 per month from a private investment account during the first 23 years of your retirement. Assuming you can earn annual returns of 5.2% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 44P
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Question
You estimate you need to supplement your social security payments with monthly withdrawals of $1,400.00 per month from a private investment account during the first 23 years of your retirement. Assuming you can earn annual returns of 5.2% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
Expert Solution
Step 1
The question is based on the concept present value of annuity payment
Formula as,
Step 2
The given data as,
Monthly withdrawal (pmt)=$1400
Interest rate = 5.2% (annual ) =5.2%/12= 0.433%
Number of payment (n) = 23*12= 276 months
Accumulated required fund (pv) =?
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