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Use the general formula A = .
Here A is the initial amount at the account; W is the monthly withdrawn value; r is the nominal monthly percentage r = 0.1/12;
presented as a decimal; p = 1 + r and n is the number of withdrawing periods (months, in this case).
In this problem, W is the unknown; the monthly rate is r = 0.10/12 = 0.00833, p = 1 + 0.00833 = 1.00833, the number of payment
periods (= the number of months) is n = 25*12 = 300. So
300000 = .
The factor is equal to 110; therefore
W = = 2727 dollars (rounded to the closest lesser dollar).
Thus you will be able to withdraw about $2727 every month during 25 years..
Solved.
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In this site, there is a group of lessons associated with annuity saving plans and retirement plans. They are
- Ordinary Annuity saving plans and geometric progressions
- Annuity Due saving plans and geometric progressions
- Solved problems on Ordinary Annuity saving plans
- Withdrawing a certain amount of money periodically from a compounded saving account (*)
- Miscellaneous problems on retirement plans
From these lessons, you can learn the subject and can see many similar solved problems.
The closest lesson to your problem is marked (*) in the list.