Question

You want to be able to withdraw $20,000 each year for 15 years. Your account earns 8% interest.

a) How much do you need in your account at the beginning?

$


b) How much total money will you pull out of the account?

$


c) How much of that money is interest?

$

Answer 1

a.the amount needed in the account at the beginning is $1,564,826.

b.the total amount of money pulled out of the account is $300,000.

c.The negative result means that the interest earned is not enough to cover the withdrawals, and there is actually a loss of $1,264,826.