You are planning to save for retirement over the next 30


You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $1,300 per month in a stock account in real dollars and $555 per month in a bond account in real dollars. The effective annual return of the stock account is expected to be 12 percent, and the bond account will earn 8 percent. When you retire, you will combine your money into an account with an effective return of 9 percent. The returns are stated in nominal terms. The inflation rate over this period is expected to be 4 percent. How much can you withdraw each month from your account in real terms assuming a 25-year withdrawal period? What is the nominal dollar amount of your last withdrawal?

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Financial Management: You are planning to save for retirement over the next 30
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