Question

Your aunt has $440,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginningimmediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $50,000 left in the end?

a.

14.37

b.

16.38

c.

13.93

d.

12.50

e.

11.35

Answer 1

Answer ) We can solve the following question in excel

PV = -440000 (Amount invested)

Rate = 5.5% (the rate of return for the investment)

PMT = 45000 (this is the amount of money that is withdrawn every year at the beginning)

FV = -50000 (this is the amount to be left)

Nper = As calculated in excel = 14.37 (Option A)

The excel workings are shown below

SUM 1 -4,40,000.00 PV Rate PMT| FV 5.50%) 45000l 50000 3 10 Nper ENPER(E8,E9,E7,E10,1)