Question

As a gift from your parents, you just received $50,000 for your education. You can earn an annual rate of 8% on your investments. How much can you withdraw each year (end of year) for the next 4 years just using up the $50,000?

Answer 1

annual withdrawal = $15096.04

Step-by-step explanation:

given data

present value = $50,000

annual rate = 8%

time = 4 year

to find out

How much can you withdraw each year

solution

we find here annual withdrawal amount that is express as

annual withdrawal =
`(present\ value)/((1-(1+r)^(-t))/(r))` ................1

here r is rate and t is time

so put here value we get

annual withdrawal =
`(50000)/((1-(1+0.08)^(-4))/(0.08))`

annual withdrawal =
`(50000)/(3.31212)`

annual withdrawal = $15096.04