Question

You want to be able to withdraw $40,000 each year for 30 years.
Your account earns 7% interest.

a) How much do you need in your account at the beginning?

$

b) How much total money will you pull out of the account?

$

c) How much of that money is interest?

$

Answer #1

a ) Calculation of the amount in your account :-

Here 40,000 each year for 30 years.

So, we find the present value.

Present value = Payment receive * PVAF(7%,30 years)

present value = 40,000 * [ 1 - 1/(1.07)^{30}] / 0.07

= 40,000 [ 1 - 0.131367] / 0.07

= 40,000 * 12.40904

Present value = $ 496,361.64734

Amount need in your account at beginning = $ 496,361.65

b ) Total amount you received :-

Total amount received = 40,000 * 30 =$ 1,200,000

c ) Total interest received :-

Total interest = Total amount received - Amount in your account at beginning = $ 1,200,000 - 496,361.64734 = $ 703638.35266

You want to be able to withdraw $40,000 each year for 25 years.
Your account earns 8% interest.
a) How much do you need in your account at the beginning?
$
b) How much total money will you pull out of the account?
$
c) How much of that money is interest?

You want to be able to withdraw $40,000 each year for 15 years.
Your account earns 6% interest.
a) How much do you need in your account at the beginning? $
b) How much total money will you pull out of the account? $
c) How much of that money is interest? $

You
want to be able to withdraw $30,000 each year for 20 years. Your
account earns 7% interest.
How much do you need in your account at the beginning?
How much total money will you pull out of the account?
How much money of that is interest?

You want to be able to withdraw $25,000 each year for 20 years.
Your account earns 6% interest.
a) How much do you need in your account at the beginning?
$
b) How much total money will you pull out of the account?
$
c) How much of that money is interest?
$

You want to be able to withdraw $25,000 each year for 15 years.
Your account earns 9% interest.
a) How much do you need in your account at the beginning?
$
b) How much total money will you pull out of the account?
$
c) How much of that money is interest?

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1. You want to be able to withdraw $35,000 each year for 25
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a) How much do you need in your account at the beginning?
b) How much total money will you pull out of the account?
c) How much of that money is interest?
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3. Suppose...

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