geno3141

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 #1
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A modification of the information from this site:  http://www.opentextbookstore.com/mathinsociety/current/Finance.pdf

A formula that can be used is:

P  =  A[ 1 - (1 + r)-y ] / r

P = the beginning amount                        A = amount withdrawn = 12 000

r = interest rate, as a decimal = 0.07       y = number of years = 25

P  =  12000[ 1 - (1 + 0.07)-25 ] / 0.07

P  =  139,843.00

This assumes that the amount will be withdrawn at the end of each year.

If you want to withdraw that amount at the beginning of each year, calculate the formula for 24 years ($137,632.01) and add the first year's withdrawal (for a total of $149,632.01).

Jan 16, 2015