RatedrillHow long a balance lasts
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
A retiree has $110,000 invested at 3.25% APR, compounded monthly, and withdraws $500 at the end of each month. How many monthly withdrawals can be made before the money runs out? Give N to 2 decimals, as a calculator shows it.
What this problem teaches
That is about 27.9 years.
A hint if you get stuck
Solve the annuity present value formula for n: n = -ln(1 - PV × i / PMT) / ln(1 + i).
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