Calculating the retirement payments
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An engineer on the verge of retirement has accumulated savings of $200,000 in an account paying 10% compounded quarterly.
1. The engineer wishes to withdraw $7000 each quarter for living expenses. For how long can he/she withdraw that full amount?
10 years
12.5 years
15 years
25 years
For as long as he/she lives.
2. How much can he/she withdraw quarterly if he/she expects to live for only ten years after retirement?
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Solution Summary
Solution describes the steps to calculate the time period within which a certain fund will be exhausted given a fixed periodic withdrawal. It also calculates the maximum withdrawal per period if expected life is given.
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1. The engineer wishes to withdraw $7000 each quarter for living expenses. For how long can he/she withdraw that full amount?
Interest rate per quarter=i=10%/4=2.5%
Periodic amount=R=$7000
PV of ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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