To find the monthly amount Ivan can withdraw so that his nest egg lasts for 14 years, we can use the future value of an annuity formula:
Future Value = Pmt * [(1 + r)^n - 1] / r
Where:
Pmt = Monthly withdrawal amount
r = Monthly interest rate (7% / 12)
n = Total number of months (14 years * 12 months)
So, plugging in the values:
125000 = Pmt * [(1 + 0.07/12)^(14*12) - 1] / (0.07/12)
125000 = Pmt * [1.63534 - 1] / (0.005833)
125000 = Pmt * 49.991
Pmt = 125000 /49.991
Pmt = R 2 500
Therefore, Ivan can withdraw R 2 500 per month in order to make his nest egg last for 14 years.
Ivan is 66 year old and has just retired. He has a nest egg of R 125 000. He wants to know what amount he will receive monthly so that the money will last 14 years. Assuming an annual rate of 7% compounded monthly is applicable.
R 1 062.15
R 1 712.74
R 1 166.50
R 2 109.64
R 3 172.60
1 answer