1.

Raymond Kroncke has just retired at age 65. He plans to fund his retirement income using a Roth IRA (a non-taxable retirement account), which currently has a value of $3,000,000. Mr. Kroncke expects to live for 18 more years. During retirement, he plans to withdraw income from his retirement account once every 18 months, with the first withdrawal to occur immediately and the last withdrawal occurring 18 months prior to his death (at age 83). Mr. Kroncke is confident that his retirement account will earn a semiannually compounded return of 6.4 percent per year. Prices are expected to increase at a semiannually compounded rate of 2.8 percent per year due to inflation. Assuming that Mr. Kroncke wants the purchasing power of his periodic withdrawals/income to remain constant during retirement, determine the maximum initial withdrawal that can be made from the retirement fund assuming there is one withdrawal every 18 months, with the first withdrawal to occur immediately, and that no withdrawal occurs at the end of the 18-year retirement period.