SOLUTION: you want to be able to withdraw $25,000 each year for 20 years. your account earns 7% interest a) how much do you need in your account at the begining? b) how much total money
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Question 1203887: you want to be able to withdraw $25,000 each year for 20 years. your account earns 7% interest a) how much do you need in your account at the begining? b) how much total money will you pull out of the account c) how much of that money is interest
Found 2 solutions by Theo, ikleyn:
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
the calculator qat https://arachnoid.com/finance/ can help you solve this.
htere are the results.
a) how much do you need in your account at the begining?
present value is 264,850.36.
that's how much need at the beginning of the investment eriod.
b) how much total money will you pull out of the account?
withdrawals of 25000 per year * 20 years = 500,000.
that's the total amount you will be able withdraw from the account over the investment period.
c) how much of that money is interest?
500,000 minus preseent value of 264,850.36 = 235,149.64
that's the total interest your earned on your investment over the investment period.
note:
money that you invest into the account is either entered or shown as negative.
money that you receive from the account is either entered or whown as posiiive.
in this problem, you received the 25000 at the end of each year.
that is entered as positive.
the present value required is money that you needed to invest up front.
that is shown as negative.
the calculator requires that convention to be used.
if you enter the payment as positive, it will give you the present value as negative.
if you enter the payment as negative, it will give you the present value as positive.
Answer by ikleyn(52803) (Show Source): You can put this solution on YOUR website!
.
Looking in your posts from day to day and from year to year, I see
that you REGULARLY post incorrect formulations.
This one is incorrect, too.
It is incorrect, because the account is compounded, but in your post, there is no an instruction,
if the money is withdrawn at the end or at the beginning of the period/year.
I do not think that "your professor" or your source is so illiterate in order for do not know it.
From it, I make the ONLY possible conclusion that it is YOU who creates these incorrect problems.
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