Question

Your aunt has $270,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $50,000 left in the end?

Answer 1

Answer:

She can withdraw for 5 years and still have $37,917.

Explanation:

Giving the following information:

Your aunt has $270,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account.

Year 1= (270,000 - 45,000)*1.055= 237,375

Year 2= (237,375 - 45,000)*1.055= 202,956

Year 3= (202,956 - 45,000)*1.055= 166,644

Year 4= (166,644 - 45,000)*1.055= 128,334

Year 5= (128,334 - 45,000)*1.055= 87,917.37

She can withdraw for 5 years and still have $37,917.