Your uncle has $300,000 invested at 7.5%, and he now wants to retire. He wants t
ID: 2669734 • Letter: Y
Question
Your uncle has $300,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, beginning at the end of this year. He also wants to have $25,000 left to give you when he ceases to withdraw funds from the account. For how many years can he make the $35,000 withdrawals and still ahve $25,000 left in the end?a. 14.21
b. 14.96
c. 15.71
d. 16.49
e. 17.32
I already know the answer is b. 14.96 but I can't seem to get that. Please solve using a financial calculator.
Explanation / Answer
Here we have Future Value of annuity case. We have PV of annuity as $300,000, Rate = 7.5%, Annual withdrawl = PMT=35000, Duration of annuity = nper = ?? FV of Annuity = 25000 So we use nper function in excel. Duration of annuity = nper =nper(Rate,PMT,PV,FV) = nper(7.5%,-35000,300000,25000) ie nper = 14.96% ...............Ans (b)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.