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10. Today, you are retiring. You have a total of $413,926 in your retirement savings and...

10.

Today, you are retiring. You have a total of $413,926 in your retirement savings and have the funds invested at 4.2 percent, compounded monthly. You want to withdraw $2,500 at the beginning of every month, starting today. You also want the withdrawals to stop when your account balance declines to $100,000. For how many years can you make withdrawals?

17.07 years

18.24 years

16.96 years

15.22 years

13.81 years

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Answer #1

the period till which withdrawals can be made is calculated using NPER function in Excel. with the following parameters,

rate = monthly rate = quoted rate /12

pmt = 2500 = monthly withdrawal

pv = -413926 = amount in retirement savings

fv = 100000 = account balance

type = 1 ( for beginning of the period withdrawals)

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