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You have $400,000 saved for retirement. Your account earns 5% interest. How much will you be able to pull out Chegg Solution each month, if you want to be able to take withdrawals for 20 years?

Respuesta :

jepessoa

Answer:

$2,639.91

Explanation:

In this case, you expect to make 240 monthly withdrawals. Calculating this is similar to calculating the payments for paying a credit.

  • principal = $400,000
  • interest rate = 0.05/12 = 0.004167
  • n = 240

payment = principal x rate x [(1 + r)ⁿ] / [(1 + r)ⁿ - 1]

payment = $400,000 x 0.004167 x [(1 + 0.004167)²⁴⁰] / [(1 + 0.004167)²⁴⁰ - 1] =  $400,000 x 0.004167 x (2.712864 / 1.712864) = $2,639.91