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How much could you withdraw at the beginning of each year if you have $1,600,000, earn 8%, and make annual withdrawals for 25 years? How much could you withdraw if your withdrawals were at the end of each year? Since the withdrawals are cash inflows to you, enter your answers as positive numbers in whole dollars (no decimals), no dollar sign, e
How much could you withdraw at the beginning of each year if you have $1,600,000, earn 8%, and make annual withdrawals
for 25 years?
How much could you withdraw if your withdrawals were at the end of each year?
Since the withdrawals are cash inflows to you, enter your answers as positive numbers in whole dollars (no decimals), no dollar sign, e.g., 105000.
Expert Solution
Computation of Annual Withdrawl using PMT Function in Excel:
=pmt(rate,nper,-pv,fv,type)
Here,
PMT = Annual Withdrawl = ?
Rate = 8%
Nper = 25 years
PV = $1,600,000
FV = 0
Type = 1 (Beginning of year)
Substituting the values in formula:
=pmt(8%,25,-1600000,0,1)
PMT or Annual Withdrawl = $138,783.38
Computation of Annual Withdrawl using PMT Function in Excel:
=pmt(rate,nper,-pv,fv,type)
Here,
PMT = Annual Withdrawl = ?
Rate = 8%
Nper = 25 years
PV = $1,600,000
FV = 0
Type = 0 (End of year)
Substituting the values in formula:
=pmt(8%,25,-1600000,0,0)
PMT or Annual Withdrawl = $149,886.05
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