Joan Dale inherited $500,000 that she invested at 12% APR compounded monthly and

Question

Joan Dale inherited $500,000 that she invested at 12% APR compounded monthly and will not make any further payments. In 15 years when she retires, she will reinvest it in a more conservative fund that earns 5% APR with monthly compounding. If she wants the retirement funds to last 25 years, how much will she receive monthly in her retirement years. Joan Dale inherited $500,000 that she invested at 12% APR compounded monthly and will not make any further payments. In 15 years when she retires, she will reinvest it in a more conservative fund that earns 5% APR with monthly compounding. If she wants the retirement funds to last 25 years, how much will she receive monthly in her retirement years.

Explanation / Answer

monthly rate =12/12 =1

number of months =15*12 =180

after 15 yrs she wil get 500000*1.01^180) =2997901

..

for 25 yrs 5 % yr rate.. hence monthly rate =5/12 =0.4167

number of months =25*12 =300

let c be the monthly payement

hence 2997901*1.004167^300) = 300 C

hence C =34792

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