In 2008, Harold deposited $100,000 in an account paying 12.1% annual interest. Harold wants to make six...
In 2008, Harold deposited $100,000 in an account paying 12.1% annual interest. Harold wants to make six equal annual withdrawals from the account starting with the first withdrawal in 2018. Further, Harold wants to have exactly $140,000 left in the account in 2025. How large can each of the annual withdrawals be? $61,084.74 $50,976.92 $33,627.22 $81,878.74 $54,491.29
Homework Answers
| Deposit | $100,000 | ||
| Annual Interest=12.10%= | 0.121 | ||
| Future value of deposit in 2017: | |||
| Number of years | 9 | (2017-2008) | |
| Future value=100000*(1+0.121)^9(amount available in account in 2017 | $ 279,544.22 | ||
| Value of $140000 in 2017: | |||
| Number of Years | 8 | (2025-2017) | |
| Value of $140000 in 2017=140000/(1.121^8) | $ 56,141.39 | ||
| Value of net amount available for withdrawal in 2017= | $ 223,402.83 | (279544.22-56141.39) | |
| Number of annual withdrawal | 6 | ||
| Amount of annual withdrawal | $54,491.29 | (Using PMT function of excel with Rate=12.1%,Nper=6,PV=-223402.83) | |
| Answer: | |||
| $54,491.29 | |||
|
|
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