Answer:
Monthly withdraw= $5,870.6
Explanation:
Giving the following information:
Stock:
Monthly deposit= $700
Interest rate= 0.075/12= 0.00625
Number of periods= 30*12= 360
Bond:
Monthly deposit= $400
Interest rate= 0.055/12= 0.0045833
Number of periods= 30*12= 360
<u>First, we need to calculate the value of the investment at the moment of retirement:</u>
<u></u>
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Stock:
FV= {700*[(1.00625^360) - 1]} / 0.00625
FV= $943,211.797
Bond:
FV= {400*[(1.00458^360) - 1]} / 0.00458
FV= $365,447.415
Total FV= $1,308,659.212
<u>Now, the monthly withdrawal:</u>
Interest rate= 0.025/12= 0.002083
Number of periods= 25*12= 300
Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]
Monthly withdraw= (1,308,659.212*0.002083) / [1 - (1.002083^-300)]
Monthly withdraw= $5,870.6
