brucegoose
New member
- Joined
- Jan 14, 2013
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$95000 yielding 6% annually withdrawing $1000 monthly when will funds be depleted?
Does your book give a formula for the present value of an annuity?$95000 yielding 6% annually withdrawing $1000 monthly when will funds be depleted?
Does your book give a formula for the present value of an annuity?
What is the relationship between your initial balance and an annuity?
what are the values to put into the formula for the annuity?[/QUOTE
there is no annuity
OK Please tell me what course you are taking and what exactly the problem asks.Does your book give a formula for the present value of an annuity?
What is the relationship between your initial balance and an annuity?
what are the values to put into the formula for the annuity?[/QUOTE
Can you use excel or some other spreadsheet software?
I'll be gone for an hour or two.
$95,000 yielding 6% annually withdrawing $1000 monthly.
When will funds be depleted?
In the US, "yield" frequently means the rate of simple interest that is equivalent to the contractual rate compounded over a year assuming no withdrawals. The idea is to give consumers a number that is roughly comparable regardless of compounding frequency, 360/365 day year issues, etc.You stated "yielding 6% annually"; this usually means $1 = $1.06
after 1 year (the 6% does not compound monthly).
So the "i" has to be adjusted accordingly:
(1 + i)^12 = 1.06
i = 1.06^(1/12) - 1 = ~.00486755...
Follow Soroban's step: you should end up with ~127.822