Question
Miss Elizabeth will be 25 years old tomorrow. She will receive the proceeds of a trust fund that was set up by her wealthy grandmother.
Miss Elizabeth will be 25 years old tomorrow. She will receive the proceeds of a trust fund that was set up by her wealthy grandmother. Her grandmother invested $10000at 5% when Elizabeth was 5 years old. Elizabeth plans to invest her inheritance with an insurance company at a guaranteed rate of 12% until she retires on her 55th birthday.
Elizabeth will also receive $5000 on her 25th birthday. This was the total prize money she won in a contest. She wishes to invest this at a Money Market fund with an expected return of 5.25% until she retires.
At retirement, Elizabeth will begin to draw down her investment in 30 equal installments calculated to reduce her investments fund to $0. She will make each withdrawal at the end of the year and that the money that remains reinvested will continue to earn 10%.
What will be the amount of each installment?
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