Question

You plan to make a deposit today of $10000 so that you can withdraw the same amount energy year for 20 years starting at the end of year 1, how much withdraw every year if interest rate is 8%?

Answer 1

Given

Amount deposited today = $10,000

Number of years = 20 years

Interest rate = 8%

Calculate the yearly withdrawals.

Step – 1

In this question, a given present amount is given. We need to calculate the annual amount that can be withdrawn if we deposit $10,000 now.

Present amount is given; calculate the annual withdrawal for 20 years at an interest of 8%

Step – 2

Factor to be used

A = P (A/P, 8%, 20)

P = $10,000

The decimal value of (A/P, 8%, 20) from the compound interest table is 0.1019.

Putting the values in the above factor

A = $10,000 (0.1019)

A = $1019

Step – 3

The annual uniform can be withdrawn every year for 20 years will be $1,019