Harry started to work today and wants to establish a saving plan for his future. His salary this year (at the end of year 1) will be $60,000 and it will grow by 4% annual. He is planning to work for 4 years (from year 1 to year 4) and save a 40% of his salary so he can pay his MBA degree in the years 5 and 6. Harry estimates that his MBA degree will cost him $50,000 at the beginning of year 5 and $50,000 at the beginning of year 6. If he is left with a surplus after paying his MBA degree, Harry plans to leave that leftover gaining interests.
After finishing up his MBA degree, Harry thinks that he can find a job that pays him $150,000 in the year 7 and that it can grow by a 6% annual. Harry plans to save a 15% of his salary of the year 7 to the year 36 that is when he plans to retire.
The interest rate is 7.4% annual (effective)
Presume Harry receives his salary in a single payment at the end of each year.
a) Find how much Harry will be able to withdraw monthly from the year 37 to the year 70 (the first monthly withdrawal will be at the end of month one in the year 37.)