Question 1194931: You just sold a house for $200,000. You can invest the money at 5%/a compounded semiannually. How much could you withdraw every 6 months, starting in 6 months, for the next 20 years?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! you have 200,000 now.
at 5% compounded semiannually, you will have 200,000 * (1 + .05/2) ^ 1 = 205,000 to draw from starting 6 months from now.
you will be able to withdraw 8,166.43 at the end of each semi-annual period, rounded to the nearest penny.
here's what it looks like at the end of each semi-annual period.
i used the ti-ba-ii calculator to get the payments.
inputs to that calculator were:
present value = -205,000
future value = 0
number of time periods = 20 years * 2 semi-annual periods per year = 40 semi-annual time periods.
interest rate per time period = 5% per year / 2 = 2.5% per semi-annual time period.
money is withdrawn at the end of each semi-annual time period.
output was payment at the end of each time period = 8,166.43 rounded to the nearest penny.
let me know if you have any questions.
theo
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