You want to be able to withdraw $30,000 each year for 20 years. Your account earns...

You want to be able to withdraw $30,000 each year for 20 years. Your account earns 8% interest. a) How much do you need in your account at the beginning? $ b) How much total money will you pull out of the account? $ c) How much of that money is interest? $

Expert Solution

Answer-

Amount withdrawn each year = PMT = $ 30000
Number of years = N = 20
Future value = $ 0
Interest ratte = 8 %

Present value = PV = ?

Using financial calculator we get

a) How much do you need in your account at the beginning = PV = $ 294544.42

b) How much total money will you pull out of the account?

The amount that will be pulled out of the account = $ 30000 x 20 = $ 600000

c) How much of that money is interest?

Interest = Total amount that is pulled out of the account - Amount at the beginning

Interest = $ 600000 - $ 294544.42 = $ 305455.58

jeff jeffy answered 2 years ago

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