Question

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?

Answer #1

a) | |||

Present Value Of An Annuity | |||

= C*[1-(1+i)^-n]/i] | |||

Where, | |||

C= Cash Flow per period | |||

i = interest rate per period | |||

n=number of period | |||

= $40000[ 1-(1+0.08)^-25 /0.08] | |||

= $40000[ 1-(1.08)^-25 /0.08] | |||

= $40000[ (0.854) ] /0.08 | |||

= $4,26,991.05 |
|||

b) | Total money pull out = $40000*25 | ||

=$10,00,000 | |||

C ) | Interest = $1000000-426991.05 | ||

=$5,73,008.95 | |||

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?
$

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 $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?

You want to be able to withdraw $50,000 each year for 15 years.
Your account earns 4% 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 $50,000 each year for 15 years.
Your account earns 6% interest. a) How much do you need in your
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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?

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b) How much total money will you pull out of the account?
c) How much of that money is interest?
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You want to be able to withdraw $50,000 from your account each
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