RatedrillMonthly income from savings
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
You retire with $200,000 earning 3.25% APR, compounded monthly. What equal withdrawal at the end of each month uses up the balance in exactly 35 years?
What this problem teaches
The formula: PMT = PV × i / (1 - (1 + i)^-n). Set P/Y = C/Y = 1, so I/Y is the rate per period. Cash you pay out is negative and cash you receive is positive.
A hint if you get stuck
This is a loan in reverse: PMT = PV × i / (1 - (1 + i)^-n).
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