The first thing to do is to find the Future Value of the Billy Bob's $5,000 investment @ 8% for 43 years.
FV = 5,000 x [1 + 0.08/4]^(43*4)
FV = 5,000 x 1.02^172
FV = 5,000 x 30.14598946562.....
FV =$150,729.95 - This is what the retirement fund of Billy Bob is worth at 65.
The next thing to do is to calculate the monthly payments that he will receive for the next 25 years.
PV=P{[1 + R]^N - 1 / [1 + R]^N} / R
150,729.95 = P x {[1 + 0.07/12]^(25*12) - 1 / [1 + 0.07/12]^(25*12)} / 0.07/12
150,729.95 = P x 141.48690338........
PAYMENT = 150,729.95 / 141.48690338 =$1,065.33 - This is the monthly payment that Billy Bob should receive each and every month for 25 years.
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