In: Finance
You want to be able to withdraw $45000 each year for 15 years. Your account earns 4% interest. How much do you need in your account at the beginning?
Present Value Of An Annuity |
= C*[1-(1+i)^-n]/i] |
Where, |
C= Cash Flow per period |
i = interest rate per period |
n=number of period |
= $45000[ 1-(1+0.04)^-15 /0.04] |
= $45000[ 1-(1.04)^-15 /0.04] |
= $45000[ (0.4447) ] /0.04 |
= $5,00,327.43 |