Question

Your father's employer was just acquired, and he was given a severance payment of $397,500, which...

Your father's employer was just acquired, and he was given a severance payment of $397,500, which he invested at a 7.5% annual rate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his funds, i.e., run the account down to zero?

Homework Answers

Answer #1
Number of period = =nper(rate,pmt,-pv,fv)
= 26.40 Years
So, it will take approximate 26 years to run the account down to zero.
Where,
nper Number of period ?
pmt periodical payment $           35,000
pv Present Value $       3,97,500
fv Cash flow at the end of period 0
rate Annual rate of interest 7.50%
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