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You are planning to save for retirement over the next 30 years. To save for retirement,...

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Finance

You are planning to save for retirement over the next 30 years.To save for retirement, you will invest $800 per month in a stockaccount in real dollars and $400 per month in a bond account inreal dollars. The effective annual return of the stock account isexpected to be 11 percent, and the bond account will earn 7percent. When you retire, you will combine your money into anaccount with an effective return of 9 percent. The returns arestated in nominal terms. The inflation rate over this period isexpected to be 4 percent.
How much can you withdraw each month from your account in realterms assuming a 25-year withdrawal period? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
What is the nominal dollar amount of your last withdrawal?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

Answer & Explanation Solved by verified expert
3.7 Ratings (334 Votes)
Real return on stock account 1 nominal return 1 inflation 1 1 11 1 4 1 673 Real return on bond account 1 nominal return 1 inflation 1 1 7 1 4 1 288 Real return on combined account 1 nominal return 1 inflation 1 1 9 1 4 1 481 The amount in retirement account at the    See Answer
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