Your uncle has $375,000 and wants to retire. he expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. how much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

Question

Brennen Gill

Business

9 August, 12:32

Your uncle has $375,000 and wants to retire. he expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. how much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

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Answers (1)

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Rosa Mueller · Answer 1

The formula of the present value of an annuity ordinary is

Pv=pmt [ (1 - (1+r) ^ (-n)) : r]

Pv present value 375000

PMT withdrawal amount?

R interest rate 0.075

N time 25 years

Solve the formula for PMT

PMT=Pv : [ (1 - (1+r) ^ (-n)) : r]

PMT=375,000: ((1 - (1+0.075) ^ (

-25)) : (0.075))

=33,641.50 ... answer