For this part of the project, you will be looking at the difference that the frequency of
Question:
For this part of the project, you will be looking at the difference that the frequency of withdrawals and compounding makes on payouts from annuities.
For all parts of this problem, money is invested in a retirement account with an APR of 8.04%. (This is close to the average annual return rate for a traditional individual retirement account over the last decade.) You want to be able to withdraw $24,000 per year for 20 years after retirement. Round up to the cent for each answer.
a. How much must you have in the account to start with if compounding and withdrawals are both quarterly?
b. How much must you have in the account to start with if compounding and withdrawals are both monthly?
Money Banking and Financial Markets
ISBN: 978-0078021749
4th edition
Authors: Stephen Cecchetti, Kermit Schoenholtz