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You want to be able to withdraw $4000 a month for 30 years how much would you need to have in your account with an APR of 3.4% to accomplish this goal

User Fiktik
by
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2 Answers

5 votes

Answer:

You need to have $904,510.28 in your account when you begin

User Naskoos
by
7.9k points
5 votes

Answer:

$904,510.28

Explanation:

If we assume the withdrawals are at the beginning of the month, we can use the annuity-due formula.

P = A(1 +r/n)(1 -(1 +r/n)^(-nt))/(r/n)

where r is the APR, n is the number of times interest is compounded per year (12), A is the amount withdrawn, and t is the number of years.

Filling in your values, we have ...

P = $4000(1 +.034/12)(1 -(1 +.034/12)^(-12·30))/(.034/12)

P = $904,510.28

You need to have $904,510.28 in your account when you begin withdrawals.

User Corey Wu
by
8.7k points
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