Question

Quarterly withdrawls of $650 for 6 years; interest rate is 4.5% compounded quarterly.

Find the amount necessary to fund the given withdrawls.

Answer 1

The amount needed to finance this level of withdrawals is $ 9422.06

Explanation:

For a fixed amount periodically withdrawn, during
`n` periods, with an interest rate
`i`, there is a present value of:

`V_(p) = A [(1- (1 + i) ^(- n))/(i)]`. From where,

`V_(p) = 650 [(1- (1 + 0.045)^(-24))/(0.045)] = 9422.06`

The amount needed to finance this level of withdrawals is $ 9422.0609