SOLUTION: You have $400,000 saved for retirement. Your account earns 4% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 15 years?

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Question 1204143: You have $400,000 saved for retirement. Your account earns 4% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 15 years?

Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!
Recall that the formula for the present value of the ordinary annuity,

P=%28x%2Fi%29%281-%281%2Bi%29%5E%28-nk%29%29
if
P=400000
i%2F12=4%2F12%=0.04%2F12=> (monthly)
n=15
k=12 (months)
then
400000=%28x%2F%280.04%2F12%29%29%281-%281%2B0.04%2F12%29%5E%28-15%2A12%29%29

400000=%28x%2F0.003333333333333333%29%281-0.549359504471055%29

400000=%28x%2F0.003333333333333333%29%280.45064049552894503%29

400000=135.19214865868352251x

x=400000%2F135.19214865868352251

x=2958.75

you would be able to withdraw 2958.75 each month for 15+years