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You are advising a client who has just had her 50th birthday. Your client is...

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Finance

You are advising a client who has just had her 50th birthday. Your client is worried about her retirement in another 15 years. She currently has $20,000 in savings, invested in equal proportions in a benchmark portfolio of stocks and risk-free assets. As an experienced investment advisor, you estimate that the annual return on the stock portfolio is normally distributed with mean = 10% and standard deviation = 15%. The risk-free interest rate (continuously compounded) is 5%. Your client has the following question: Suppose I save $25,000 annually and continue my current investment policy. Suppose further that my life expectancy is 80 years and that for the last 15 years of my life (at the start of years 66 to 80), I withdraw 8% of the investment balance at the beginning of the year from my savings account. When I die at 80, I will leave the remainder of the account to my favorite nephew. What is the average amount I can expect to withdraw between ages 66-79?

How much will I leave my nephew? Do 25 simulations of this problem to show how the average bequest is affected by changing the investment proportions.

*****Important: Please provide excel version not python*****

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