Question

Rich Uncle Bob left you an inheritance of $500,000. You invest these funds in an investment account earning 4% annual compound interest. At the beginning of each year (including Year 1), you withdraw $40,000 to live on. At the beginning of Year 3, only once, you withdraw $80,000. Which year (example "year 8) will you not be able to take your normal $40,000 withdraw because you've run out of money?

How can you solve this on a financial calulcator? If possible?

Answer 1

	Opening	Withdraw	Interest	Closing
1	500,000	40,000	18,400	478,400
2	478,400	40,000	17,536	455,936
3	455,936	80,000	15,037	390,973
4	390,973	40,000	14,039	365,012
5	365,012	40,000	13,000	338,013
6	338,013	40,000	11,921	309,933
7	309,933	40,000	10,797	280,731
8	280,731	40,000	9,629	250,360
9	250,360	40,000	8,414	218,774
10	218,774	40,000	7,151	185,925
11	185,925	40,000	5,837	151,762
12	151,762	40,000	4,470	116,233
13	116,233	40,000	3,049	79,282
14	79,282	40,000	1,571	40,853
15	40,853	40,000	34	888

In this manner this amount will not run short for next 15 years inspite of withdrawl of 40,000 every year (except third year when 80000 is being withdrew)