Question

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?

Answer #1

**Answer-**

**Given**

**Payment = PMT = $ 25000
Number of years = N = 15
Interest rate = I/Y = 9 %
Future value = FV= $ 0
Present value = PV = ?**

**a)**

**Beginning value = PV = $ 201517.21**

**Therefore the amount needed in the account in the
beginning = $ 201517.21**

**b)**

**The total money that will be pulled out of account
= Payment (PMT) x Number of years (N)
= $ 25000 x 15
= $ 375000
Total money pulled out of account = $ 375000**

**c)**

**The amount that is Interest amount out of the pulled
money
= Total money that will be pulled out of account - Beginning amount
in the account
= $ 375000 - $ 201517.21
= $ 173482.79**

**Interest amount = $ 173482.79**

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