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Jane Smith wants to retire 20 years from now. Money can be deposited in an account at an actual interest rate of 12% compounded monthly.

The future general inflation rate is estimated to be 4% per year. What monthly deposits in actual dollars must be made by the woman until she retires so that she can withdraw an annual amount of $40,000 (in terms of real dollars) over the 15 years following her retirement?

Assume that the first withdrawal is made on the date of the last deposit.

Also, determine what is the amount of the first withdrawal in terms of actual dollars?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92796764

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