Alicia has a job with a DC regulator that offers a terrific benefit package. The

Question

Alicia has a job with a DC regulator that offers a terrific benefit package. The agency contributes an annuity of $570 into a bank account in her name at the end of each month, beginning one month from today. Alicia estimates that she will work for the next 33 years (for 396 months), when at that point she'll retire. At the time of her retirement, Alicia plans to spend this bank account by drawing a monthly annuity until her projected mortality, Specifically, she will withdrawal her first monthly amount immediately at retirement, and then monthly for 25 consecutive years in retirement. Assuming an interest rate of 9% annually, what is the maximum amount Alicia will be able to withdrawal, per month, during her retirement years? Place your answer to the nearest dollar amount. Do not use a dollar sign or comma as part of your answer. For example, place the answer of one million seven hundred fifty thousand and thirty two as 1750032. Work answers out to at least 4 decimal points of accuracy

Explanation / Answer

Maximum amount of monthly withdrawal by Alicia==PMT(9%/12,12*25,-FV(9%/12,12*33,-570))=$11656.94

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