Question

# You want to be able to withdraw \$40,000 each year for 25 years. Your account earns...

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?

#### Homework Answers

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
Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT