let's assume the withdrawals are at the end of the month.
present value = 1000(1 - 1.005^-120)/.005
= 90073.45
How much should you deposit right now at 6% compounded monthly so that you can withdraw $1000 each month for 10 years?
thanks in advance!
2 answers
I believe the formula you want is the present value of an annuity
PV = C * [(1 - (1+r)^-n]/r
Where C = payment per period
r = interest rate per period
n = periods.
PV = 1000 * (1 - 1.005^-120)/.005
= 90,073.45
PV = C * [(1 - (1+r)^-n]/r
Where C = payment per period
r = interest rate per period
n = periods.
PV = 1000 * (1 - 1.005^-120)/.005
= 90,073.45
1 answer