4,000,000 nest and 4% interest rate, what is the most you couldwithdrawn from your account...

4,000,000 nest and 4% interest rate, what is the most you could withdrawn from your account each year ( equal amounts) so that the account never runs out of money (perpetuity). Money is withdraw at the beginning of the year

Expert Solution

If perpetuity starts from the beginning of the year, then

PV = Annual CF + Annual CF/Rate

400000 = X + X/0.04

400000 = X + 25 X

400000 = 26 X

X = 15384.62

Answer : 15382.62

jeff jeffy answered 2 years ago

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