You have just retired and you have ￥1,000,000 in your account. You plan to spend it...
You have just retired and you have ￥1,000,000 in your account. You plan to spend it over 30 years by withdrawing a fixed real amount every year, with the first withdrawal immediate. Suppose the interest rate is 6%. How much can you withdraw every year?
Homework Answers
| Annual Withdrawl | = | Present value / Present value of annuity of 1 | |||||||||
| = | ¥ 10,00,000 | / | 14.59072 | ||||||||
| = | ¥ 68,536.71 | ||||||||||
| Working: | |||||||||||
| Annuity is a fixed amount at regular interval.When such cash flows is at the beginning of period, it is known as annuity due. | |||||||||||
| Present value of annuity due | = | ((1-(1+i)^-n)/i)*(1+i) | Where, | ||||||||
| = | ((1-(1+0.06)^-30)/0.06)*(1+0.06) | i | 6% | ||||||||
| = | 14.59072 | n | 30 | ||||||||
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