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Finance Problem: Time Value of Money

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Your aunt has $640,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $50,000 left in the end?

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Below are my answers.

ANSWERS

Since, the problem is two-pronged, there is an element of trial and error in solving the problem
1. First, set your calculator to BEGIN
2. (Clear time value of money) Press 2ND, FV
3. Input 640000, the press PV
4. Input 5.5, then press I/Y
5. Input -45000, then ...

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