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Posted: February 14th, 2024

Mr Joe is trying to plan for retirement in 10 years, and currently he has RM150,000

Financial ManagementMr Joe is trying to plan for retirement in 10 years, and currently he has RM150,000 in a savings account and RM250,000 in common stocks. In addition, Mr Joe plans to add to his savings by depositing RM8,000 per year in his savings account at the end of each of the next 5 years and then RM10,000 per year at the end of each year for the last 5 years until retirement.1) Assuming his savings account offers returns 8 percent compounded annually while his investments in stocks will give out returns 12 percent compounded annually, how much will Mr Joe have at the end of 10 years? (Ignore taxes.)2) If Mr Joe expect to live for 20 years after his retirement, and at his retirement age, he deposits all of his savings in a bank account paying 11 percent, how much can he withdraw each year after retirement (20 equal withdrawals beginning one year after Mr Joe retires) to end up with a zero balance at death?

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