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4 August, 10:31

Suppose that on your 21st birthday you are given a $1,000,000 trust fund. If you can earn 4% in annual compound interest, how much money can you withdraw each year to ensure that if there is money in the account forever

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  1. 4 August, 10:54
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    annual payment = $40000

    Explanation:

    given data

    annual compound interest = 4%

    fund value = $1,000,000

    to find out

    annual payment

    solution

    we get here annual payment that is express as

    annual payment = fund value * annual compound interest ... 1

    put here value we get

    annual payment = 4% * $1,000,000

    annual payment = 0.04 * $1,000,000

    annual payment = $40000
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