Answer:
Monthly withdraw= $204.55
Step-by-step explanation:
First, we need to calculate the value of the account at the moment of retirement using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Stock:
Monthly deposit= $600
Interest rate= 0.07/12= 0.00583
Number of periods (n)= 20*12= 240 months
FV= {600*[(1.00583^240) - 1]} / 0.00583
FV= $312,404.24
Bond:
Monthly deposit= $400
Interest rate= 0.04/12= 0.0033
Number of periods (n)= 20*12= 240 months
FV= {400*[(1.0033^240) - 1]} / 0.0033
FV= $146,052.20
Total value at retirement= $458,456.44
Now, we can determine the monthly withdrawals after retirement:
Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]
FV= 458,456.44
n= 30*12= 360
i= 0.1/12= 0.0083
Monthly withdraw= (458,456.44*0.0083) / [(1.0083^360) - 1]
Monthly withdraw= $204.55
