Question
You are planning to save for retirement over the next 32 years. Suppose that today is January 1. Starting today, you will invest $800 a
You are planning to save for retirement over the next 32 years. Suppose that today is January 1. Starting today, you will invest $800 a month in a stock account and $600 in a bond account (i.e. investment is made at the beginning of each month). The return of the stock account is expected to be 12% per year and the return of the bond account is expected to 6% per year. (1) How much will you receive at the end of 32th year when you retire? (2) Suppose that when you retire at the end of 32th year, you put your money into an account with 6% return per year. How much can you withdraw each month (withdrawal occurs at the end of each month) from your account assuming a 25-year withdrawal period?
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