Caleb Brewster did an excellent job saving for retirement. He was able to save $

Question

Caleb Brewster did an excellent job saving for retirement. He was able to save $1,000,000 in an account that pays 12 percent per year. His plan was to eventually withdraw all his money by paying himself in equal installments every month during his 20 years of retirement, which he did for exactly 10 years. However, poor Mr. Brewster died exactly 10 years after he retired before receiving the remaining monthly payments he was due. How much money was left in Mr. Brewster's account on the day he died?

Explanation / Answer

At 12% interest rate the amount which can be withdrawn monthly is 10,586.23.

Total interest earned would be 1,540,696.

Money left at the end of 10th year is $759,864

Month Remaining Balance 1 $989,098.16 2 $988,087.30 3 $987,066.33 4 $986,035.15 5 $984,993.65 6 $983,941.75 7 $982,879.32 8 $981,806.27 9 $980,722.49 10 $979,627.88 11 $978,522.31 12 $977,405.69 13 $976,277.91 14 $975,138.84 15 $973,988.39 16 $972,826.43 17 $971,652.85 18 $970,467.53 19 $969,270.37 20 $968,061.23 21 $966,840.00 22 $965,606.55 23 $964,360.78 24 $963,102.54 25 $961,831.72 26 $960,548.20 27 $959,251.84 28 $957,942.51 29 $956,620.10 30 $955,284.45 31 $953,935.46 32 $952,572.97 33 $951,196.85 34 $949,806.98 35 $948,403.21 36 $946,985.40 37 $945,553.41 38 $944,107.10 39 $942,646.33 40 $941,170.95 41 $939,680.81 42 $938,175.78 43 $936,655.69 44 $935,120.41 45 $933,569.77 46 $932,003.62 47 $930,421.82 48 $928,824.19 49 $927,210.59 50 $925,580.85 51 $923,934.82 52 $922,272.32 53 $920,593.20 54 $918,897.29 55 $917,184.42 56 $915,454.42 57 $913,707.13 58 $911,942.35 59 $910,159.94 60 $908,359.69 61 $906,541.45 62 $904,705.02 63 $902,850.22 64 $900,976.88 65 $899,084.81 66 $897,173.81 67 $895,243.71 68 $893,294.30 69 $891,325.40 70 $889,336.82 71 $887,328.34 72 $885,299.78 73 $883,250.94 74 $881,181.60 75 $879,091.58 76 $876,980.65 77 $874,848.61 78 $872,695.26 79 $870,520.37 80 $868,323.73 81 $866,105.12 82 $863,864.33 83 $861,601.13 84 $859,315.30 85 $857,006.61 86 $854,674.83 87 $852,319.74 88 $849,941.09 89 $847,538.66 90 $845,112.20 91 $842,661.48 92 $840,186.25 93 $837,686.27 94 $835,161.29 95 $832,611.06 96 $830,035.33 97 $827,433.84 98 $824,806.34 99 $822,152.56 100 $819,472.24 101 $816,765.12 102 $814,030.93 103 $811,269.39 104 $808,480.24 105 $805,663.20 106 $802,817.99 107 $799,944.33 108 $797,041.93 109 $794,110.51 110 $791,149.77 111 $788,159.42 112 $785,139.18 113 $782,088.72 114 $779,007.77 115 $775,896.00 116 $772,753.12 117 $769,578.81 118 $766,372.75 119 $763,134.64 120 $759,864.14

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