Question
assume you drink one coffee per day, 5 days a week. Assume coffee price is $4. that makes it $20 per week and $80 per
assume you drink onecoffeeper day, 5 days a week. Assumecoffeeprice is $4. that makes it $20 per week and $80 per month. Assume you can invest $80 per month in the stock market and assume you can earn 1% per month on your stock investments.
A:At your retirement, when you are 65 years old, how much will be the total amount of money if you switch from coffee drinking to investing in the stock market now.
B. Assume that when you get to 65 (retirement) you switch your funds from stock market to bond market. Assume the yield on 20-year bond at the time of your retirement is 7%. Use the total amount of funds at your retirement from A (total funds when you are 65 years old) and withdraw a constant amount each year for the next 20 years. How much will be your annual withdrawal from age 66 to 85 if you switch your coffee drinking to stock investment.
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