Bill Petty, age 56 has just retired after 31 years of teaching. He is a husband and father of two children who are still dependent. Bill received a $150,000 lump-sum retirement bonus and will also receive $2,800 per month from a retirement annuity for the rest of his life. He has saved $150,000 in a superannuation fund and another $100,000 in other accounts. His superannuation fund is invested in the share market, but most of his other investments are in bank accounts earning 2% or 3% interest annually. Bill has asked your advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per month, considering he has two children and a non-working spouse. Because he has children, his current monthly expenses total $5,800. (Ignore tax)

The Question i & ii have been asnwer by Anonymous in Chegg already but still miss out the Question iii.

What i wonder of i & ii, which formula is this "Monthly return (A) = i x P x (1+i)?n/(i+i)?n ?- 1" ? is this a payment calculator, amortization calculator or loan calculator ?

Is it possible to give the answer by financial calculator, for example: N = 30, 1/Yr = 5% ~~~

Required:

i. Bill has an emergency fund already set aside, so he can use his $400,000 of savings for retirement. How much can he withdraw on a monthly basis if his investments return 5% annually and he expects to live 30 more years?

ii. Is the amount determined in question 1 sufficient to meet Bill’s current monthly expenses (keep in mind that he will receive a monthly payment of $2,800)? If not, how long will his retirement last if his current expenses remain the same? What if his expenses were reduced to $4,500 per month?

iii. If the inflation rate averages 3.5% during Bill’s retirement, how old will he be when prices have doubled from current levels? How much will a can of soft drink cost when Bill dies, if he lives the full 30 years and the soft drink costs $1 today?