Question

"Assume that Stephanie accumulates savings of $ 2 million by the time she retires. If she invests this savings at 12​%, how much money will she be able to withdraw at the end of each year for 20 ​years?"

Answer 1

Answer:

Explanation:

This is an annuity question. Use present value of annuity formula to solve this;

You can use a financial calculator to solve it. I'm using "Texas instrument BA II plus" calculator

(Note: if using the same calculator as above ,enter the numbers first, then each respective function )

N ; duration on investment = 20

I/Y; interest rate per year = 12%

PV; Present value = -2,000,000

FV; Future value = 0 (in annuities, use 0 if not given)

then CPT PMT = 267,757.56

Therefore, Stephanie will be able to withdraw $267,757.56