You have been saving $100/month for the last 10 years in a retirement account that earns...

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Finance

You have been saving $100/month for the last 10 years in aretirement account that earns 1% interest monthly.
(a) How much money do you have in your retirement account today?(25 points)
(b) If you STOP making contributions to your retirement account,but leave the amount you currently have in it to continue earninginterest at 1% per month, how much money will you have in yourretirement account when you retire in 30 years? (20 points)
(c) You expect to live another 25 years after you retire. Yourplan is to make equal monthly withdrawals from your retirementaccount over this 25-year retirement period such that the accountis fully exhausted. How much money can you withdraw each month?Assume that you continue to earn 1% per month on your retirementsavings. (20 points)

Answer & Explanation Solved by verified expert

3.7 Ratings (608 Votes)

Answer a Monthly savings 100 Monthly interest 1 Number of months 10 12 120 months For ordinary annuity FV Periodic annuity 1 Periodic Interest rate Number of periods 11 Periodic Interest rate 100 1 1 120 1 1 See Answer

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