Question

Your father's employer was just acquired, and he was given a severance payment of $475,000, which he invested at a 8.5% 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?

Answer 1

Answer : Calculation of Number of years it will take to exhaust his funds, i.e., run the account down to zero.

Using Financial Calculator for solving for number of years taking

rate = annual rate i.e 8.5%

pmt is periodic withdrawal i.e -35000

pv is the present value = 475000

fv is the future value = 0

Answer is (-9.40)

Solving this will come negative because interest being received is always be more than the amount of 35000 therefore it never be get exhauseted it will continuosly goes on increasing.