3. Time Value of Money (10 pts.) Your uncle has just reached retirement age and,

Q: 3. Time Value of Money (10 pts.) Your uncle has just reached retirement age and,

PLEASE RATE MY ANSWER AND COMMENT BELOW FOR ANY QUERY. THANK YOU!!! (i) Particulars Figures Present Value 2,500,000 Rate of Return p.a. 4% Current Age 70 Expected age 100 Total Years 30 Annual Withdrawal (144,575) (ii) Annual Withdrawal 100000 He can make annual withdrwal of $ 1,00,000 in order to keep remain $25,00,000 in his account at the end of 30 years for inheritance.

ID: 2600549 • Letter: 3

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3. Time Value of Money (10 pts.) Your uncle has just reached retirement age and, while you are home during winter break, has asked you for some advice for how best to manage his retirement savings. He has $2,500,000 in his account, and the money will continue to earn 4% annually. i. How much can your uncle withdraw from his retirement account each year if he would like his retirement funds to last for the next 30 years? State the TVM formula you use along with the value for all of the variables in that formula (interest rate, time, etc.). Put your answer in the box provided ii. You also point out to your uncle that if he makes the annual withdrawals you computed for him in part i, he will run out of savings if his retirement period ends up lasting longer than 30 years. You point out that a more conservative strategy would be to determine the annual retirement withdrawal amount that he could take forever based on his $2,500,000 in savings and the 4% earnings rate. Another benefit of this more conservative strategy would be that your uncle could then leave the $2,500,000 as an inheritance to a close friend or family member, such as his favorite niece or nephew who gave him all of the excellent financial advice! How much could your uncle withdraw each year if he wanted his retirement savings to last forever? Again, state the TVM formula and values of the variables you use, and put your answer in the box below.

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PLEASE RATE MY ANSWER AND COMMENT BELOW FOR ANY QUERY.

THANK YOU!!!

(i) Particulars Figures Present Value 2,500,000 Rate of Return p.a. 4% Current Age 70 Expected age 100 Total Years 30 Annual Withdrawal (144,575) (ii) Annual Withdrawal 100000 He can make annual withdrwal of $ 1,00,000 in order to keep remain $25,00,000 in his account at the end of 30 years for inheritance.

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3. Time Value of Money (10 pts.) Your uncle has just reached retirement age and,

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