You want to be able to withdraw $40,000 each year for 30 years. Your account earns 6% interest.

Question

You want to be able to withdraw $40,000 each year for 30 years. Your account earns 6% interest.

a) How much do you need in your account at the beginning?

$

b) How much total money will you pull out of the account?

$

c) How much of that money is interest?

Answer 1

(a)

6% of X is 40000

 

(6/100)X = 40000

 

X = 40000*100/6 = 4000000/6 = 2000000/3 = 666666.66

 

(b)

30 x 40000 = 1 ,200 ,000

 

(c) All of it is interest. THe original principal is not withdrawn