Question

n investor has $100,000 invested in an account that earns 5% annually. The investor wishes to withdraw $12,000 per year. If the investor withdraws $12,000 annually, the account will be fully depleted in:

Answer 1

Answer:

11 years

Explanation:

For computing, the number of years or the account will be fully depleted we need to apply the NPER formula i.e to be shown in the attachment below:

Given that,  

Present value = $100,000

Future value = $0

PMT = $12,000

Rate of interest = 5%

The formula is shown below:

= NPER(Rate;PMT;-PV;FV;type)

The present value come in negative

So, after applying the above formula, the number of years in which the account is depleted is 11 years