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?
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 ...
Calculates the amount of annual withdrawal froma fund.