Your father's employer was just acquired, and he was given a severance payment of $375,000, which he invested at a 7.5% annual rate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his funds, i. e., run the account down to zero?22.5023.6324.8126.0527.35

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22 January, 14:51

Your father's employer was just acquired, and he was given a severance payment of $375,000, which he invested at a 7.5% annual rate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his funds, i. e., run the account down to zero?22.5023.6324.8126.0527.35

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Aditya Davies · Answer 1

22.5 years will take to exhaust his funds

Explanation:

Consider the following calculations

PV = 375,000, payment = - 35,000, interest rate is 7.5%. FV = 0. Plugging these numbers into a calculator and solving for number of periods gives 22.5 years.