Question 1143249: Suppose you accumulated $500,000, perhaps from many years of saving. You put the money in a savings plan earning 6% compounded monthly. If you want to withdraw $4,000 at the beginning of each month, how long before the savings plan is exhausted?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! using the online financial calculator found at https://arachnoid.com/finance/, i get 195 months.
here are the results from using that calculator.
inputs are:
present value = -500,000
future value = 0
interest rate per month = 6% per year / 12 = .5% per month.
payments are made at the beginning of each month.
payment amount = 4,000 per month.
the present value is negative because it is money going out.
the monthly payment is positive because it is money coming in.
i click on NP and the calculator tells me that the number of months required to satisfy the requirements is 195 months.
i confirmed through the use of excel that this is correct.
the actual number of months required to satisfy the annuity is 195.0001951.
this is rounded to 195 months with a very small residual at the end of the 195th month.
the actual residual, determined through excel, is equal to 0.782388188 dollars, or 78.2388188 cents.
this is what the excel output looks like.
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