Question

Jodi is retiring at the age of 65. When she retires, she estimates that she will need a monthly income for 25 years. If Jodi starts with $328,133. 32 in an account that pays 6. 2% interest compounded monthly, approximately what monthly income will she be able to draw? a. $2,665 b. $2,154 c. $1,948 d. $1,094.

Answer 1

Monthly income refers to the gross countable income received or projected to be received during the subsequent month.

Interest compounded monthly

Given Information:

• Principal = 328,133.32
• Interest rate = 6.2%, compounded monthly
• Term = 25 years

A = P (1 + r/n)^nt

A = 328,133.32 (1 + 6.2%/12)^12*25

A = 328,133.32 (1 + 0.0052)^300

A = 328,133.32 (1.0052)^300

A = 328,133.32 (4.74)

A = 1,555,351.94  Total value after 25 years.

=1,555,351.94 / 300 months = 5,184.51 per month.

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