SOLUTION: You want to be able to withdraw $45,000 each year for 20 years. Your account earns 10% interest. a) How much do you need in your account at the beginning? $ b) How much to

Algebra ->  Sequences-and-series -> SOLUTION: You want to be able to withdraw $45,000 each year for 20 years. Your account earns 10% interest. a) How much do you need in your account at the beginning? $ b) How much to      Log On


   

Question 1194741: You want to be able to withdraw $45,000 each year for 20 years. Your account earns 10% interest.
a) How much do you need in your account at the beginning?
$
b) How much total money will you pull out of the account?
$

c) How much of that money is interest?
$
Answer by Boreal(15235) About Me  (Show Source):
You can put this solution on YOUR website!
Total=45000(1-(1+0.10/1)^(-20))/0.10
=45000*0.8514/0.1
=$383,130 needed at the outset
In 20 years, the total payments out have been $900,000, so the interest is $900,000-$383,130 that was put in the annuity, for the interest to be $516,870.