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Annual withdrawals

Your father now has $1,000,000 invested in an account that pays 9.00%. He expects inflation to average 3%, and he wants to make annual constant dollar (real) beginning-of-year withdrawals over each of the next 20 years and end up with a zero balance after the 20th year.

How large will his initial withdrawal (and thus constant dollar (real) withdrawals) be?

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Solution Summary

The solution explains how to calculate the amount of annual withdrawals given the initial investment