Question

how much money should you invest today in order to withdraw $1,200 per year for 10years...

how much money should you invest today in order to withdraw $1,200 per year for 10years if the interest rate is 5%

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Answer #1

Answer

Explanation : To find the present value we use following formula


Where,
PV = Initial Amount OR Initial Deposit OR Initial Investment OR Amount at time zero

A = Regular Withdrawal Amount OR Regular Interest OR Regular Dividend OR Installment Amount

n = Number of Years/Period

r = Compound Interest Rate

Given :
Number of Periods/Years (n) = 10

Rate of Interest (r) =5%

Regular Withdrawal (A) = $ 1200

After substituting the values into the formula we have,

The amount is $9266.08192.

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