# Annuity

A husband and wife contribute $4,000 per year to an IRA paying 10%, compounded annually, for twenty years. What is the value of their IRA? How much can they withdraw each year for 25 years at 10% compounded annually?

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#### Solution Preview

What is the value of their IRA?

Equal contribution = $4,000

No of years=n= 20

Rate of interest=r= 10.00%

To calculate the value of the IRA amount we need to calculate / read from tables the values of

FVIFA= Future Value Interest Factor for an Annuity

The formula for FVIFA is

FVIFA( n, r%)= =[(1+r%)^n -1]/r%

FVIFA (20 periods, 10.% rate)= 57.2750

Amount at the end of 20 years= Annual amount deposited ...

#### Solution Summary

Calculates the amount of annual withdrawal froma fund.

$2.49