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Calculating annual withdrawal amount

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You inherit $500,000 from your parents and want to use the money to supplement your retirement.You receive the money on your 65th birthday, the day you retire. You want to withdraw equal amounts at the end of each of the next 25 years. What constant amount can you withdraw each year and have nothing remaining at the end of 25 years if you are earning 6% interest per year?

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Solution Summary

The solution describes the steps for calculating annual withdrawal amount for 25 years so that nothing is left after 25 years. How much will be remaining at the end of twenty five years is determined.

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Solution:

Let the amount withdrawn be R per year.
Rate of interest=6%
Number of drawings=n=25

Present value of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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